New Delhi: The Reserve Bank of India (RBI) announced on April 24 that it has prohibited Kotak Mahindra Bank (KMB) from onboarding new customers through its online and mobile banking channels and issuing fresh credit cards, citing supervisory concerns.
However, the bank will continue to provide services to its existing customers, including its credit card customers, the central bank said.
“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 (i) onboarding of new customers through its online and mobile banking channels and (ii) issuing fresh credit cards,” the RBI statement read, reported the Indian Express.
According to the central bank, serious deficiencies and non-compliances were observed in various areas, including IT inventory management, patch and change management, user access management, vendor risk management, data security, data leak prevention strategy, business continuity, disaster recovery rigor, and drill.
“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. 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 said.
RBI said that 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 15 April, Mint reported.
