24 Apr 2024
Despite repeated warnings over the last two years, Kotak did not fix its IT systems.
On Wednesday, RBI barred new customer onboarding via online and mobile channels and issued new credit cards, citing “serious deficiencies and non-compliances” in Kotak Mahindra Bank's technology platforms. Kotak is the third-most valued bank in India in terms of market capitalisation.
The move may also impact the bank’s existing co-branded card deals. The ban will not affect existing banking and credit card customers. Its branches continue to operate as usual.
RBI found non-compliance in Kotak’s IT inventory management, user access management, patch and change management, vendor risk management, data security and leak prevention strategy, and business continuity and disaster management.
As per RBI, the inadequate technological infrastructure caused severe and frequent Core Banking System failures in digital banking channels in 2022-2023. The latest service disruption occurred on April 15, 2024. RBI imposed a similar ban on HDFC Bank in 2020 and removed it in March 2022.