Kotak Bank's Vaswani concerned about reputational impact of RBI order

livemint.com:

MUMBAI : Kotak Mahindra Bank's new managing director and chief executive officer, Ashok Vaswani, has expressed greater concern over the reputational fallout of the Reserve Bank of India's (RBI) restrictions on the bank than their financial impact. During his first earnings press conference on Saturday, Vaswani stressed that regaining the trust of customers and regulators would be the bank's utmost priority. To achieve this, the focus would be on upgrading technology systems and accelerating investments.

"The Reserve Bank of India order has had an impact on both franchise and reputation. Coming back, is our number one priority. Our credit card and Kotak811 businesses will be affected," said Vaswani.

"I'm worried more about the reputation impact than financial impact. Financial impact in the scheme of things will be relatively small," he added. Vaswani, who assumed the role of CEO four months ago, succeeding the bank's founder Uday Kotak, has been contending with various challenges, including the RBI ban, management restructuring, and the abrupt departure of joint managing director KVS Manian.

Last week, the RBI barred Kotak Mahindra Bank from onboarding new customers through its website or mobile app and restricted the issuance of new credit cards. This action followed "serious deficiencies" in the bank's IT system and its "continuous failure" to comply with the RBI's corrective plan. Within a week of the regulatory action, the bank's joint MD, Manian, resigned to pursue opportunities elsewhere in the financial sector.