RBI’s big action against Kotak Mahindra Bank! Lender stopped from issuing fresh credit cards, onboarding new customers digitally

financialexpress.com:

In a big setback for Kotak Mahindra Bank, the Reserve Bank of India (RBI) has restricted the private sector bank from onboarding new customers through digital channels and issuing fresh credit cards, according to a press release issued by the apex bank on Wednesday.

The RBI has taken this supervisory action against Kotak Mahindra Bank under Section 35A of the Banking Regulation Act, 1949, the release said adding that actions were necessitated 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.

The RBI directed the lender “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 bank shall, however, continue to provide services to its existing customers, including its credit card customers”, according to the release.

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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, the RBI said.

“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