The RBI noted that due to the absence of a robust IT infrastructure, the bank’s digital banking channels have suffered frequent outages
RBI penalty on Kotak Mahindra Bank
RBI curbs on Kotak Mahindra Bank- “The Reserve Bank of India has today, in exercise of its powers under Section 35A of the Banking Regulation Act, 1949, directed Kotak Mahindra Bank Limited (hereinafter referred to as ‘the bank’) to cease and desist, with immediate effect, from (1) onboarding of new customers through its online and mobile banking channels and (II) issuing fresh credit cards. The bank shall, however, continue to provide services to its existing customers, including its credit card customers,” the central bank said in a release.
Kotak Mahindra Bank was penalty by Reserve Bank of India
Citing data security concerns and deficient IT infrastructure, the Reserve Bank of India has barred Kotak Mahindra Bank from onboarding new customers online and issuing new credit cards with immediate effect. The bank can, however, continue to serve its current customers, including those holding credit cards.
The RBI said the actions are based on “significant concerns arising out of Reserve Bank’s IT Examination of the bank for the years 2022 and 2023 and the continued failure on part of the bank to address these concerns in a comprehensive and timely manner”.
“During the subsequent assessments, the bank was found to be significantly non-compliant with the Corrective Action Plans issued by the Reserve Bank for the years 2022 and 2023, as the compliances submitted by the bank were found to be either inadequate, incorrect or not sustained,” it added.
It said there were “serious deficiencies” in the way Kotak Mahindra Bank manages its IT inventory and secures its data. “Serious deficiencies and non-compliances were observed in the areas of IT inventory management, patch and change management, user access management, vendor risk management, data security and data leak prevention strategy, business continuity and disaster recovery rigour and drill, etc. For two consecutive years, the bank was assessed to be deficient in its IT Risk and Information Security Governance, contrary to requirements under Regulatory guidelines,” the RBI said.
“In the absence of a robust IT infrastructure and IT Risk Management framework, the bank’s Core Banking System (CBS) and its online and digital banking channels have suffered frequent and significant outages in the last two years, the recent one being a service disruption on April 15, 2024, resulting in serious customer inconveniences. The bank is found to be materially deficient in building necessary operational resilience on account of its failure to build IT systems and controls commensurate with its growth,” it said.
The RBI noted that due to the absence of a robust IT infrastructure, the bank’s digital banking channels have suffered frequent outages and inconvenienced customers.
The central bank has said it has decided to place some curbs on the bank in the interest of the customers. “The Reserve Bank, therefore, has decided to place certain business restrictions on the bank as mentioned above, in the interest of customers and to prevent any possible prolonged outage which may seriously impact not only the bank’s ability to render efficient customer service but also the financial ecosystem of digital banking and payment systems,” the RBI said.
The curbs, the central bank said, will be review after an audit and corrective steps. “The restrictions now being imposed will be reviewed upon completion of a comprehensive external audit to be commissioned by the bank with the prior approval of RBI, and remediation of all deficiencies that may be pointed out in the external audit as well as the observations contained in the RBI Inspections, to the satisfaction of the Reserve Bank. Further, these restrictions are without prejudice to any other regulatory, supervisory or enforcement action that may be initiated against the bank by the Reserve Bank,” the RBI said.
RBI bars Kotak Mahindra Bank from onboarding new customers via online, mobile banking channels
The RBI said the bank was found to be deficient in its IT Risk and Information Security Governance for the years 2022 and 2023.
Kotak Mahindra bank customer care international
The Reserve Bank of India (RBI) on Wednesday (April 24) directed Kotak Mahindra Bank to stop onboarding of new customers through its online and mobile banking channels and also barred it from issuing fresh credit cards, with an immediate effect.
The RBI said the bank was found to be deficient in its IT Risk and Information Security Governance for the years 2022 and 2023.
These actions were based on significant concerns arising out of the RBI’s IT examination of the bank for 2022 and 2023 and the continued failure on part of the bank to address these concerns in a comprehensive and timely manner, the RBI said in a release.
The RBI said it has decided to place certain business restrictions on the bank in the interest of customers and to prevent any possible prolonged outage which may seriously impact not only the bank’s ability to render efficient customer service but also the financial ecosystem of digital banking and payment systems.
The regulator said the bank, however, will continue to provide services to its existing customers, including its credit card customers.
