RBI Imposes Restrictions on Kotak Mahindra Bank, How Will Customers be Affected?

Apr 25, 2024 - 01:55
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RBI Imposes Restrictions on Kotak Mahindra Bank, How Will Customers be Affected?

New Delhi: The Reserve Bank of India (RBI) is currently in action mode regarding violations of rules by banks. Recently, the RBI took strict action against Paytm Payments Bank for violating rules. Since then, several banks have faced penalties and even had their licenses cancelled for disregarding regulations. In this series, the RBI has now taken action against another private bank.

Restrictions Imposed on Kotak Mahindra Bank:

The Reserve Bank has imposed a restriction on Kotak Mahindra Bank regarding digital customer onboarding and online application for new credit cards. The bank will no longer be able to add new customers digitally or issue new credit cards online.

If you have an account with this bank or are using Kotak Mahindra Bank credit cards, you may face inconvenience. Let's find out why the RBI has taken this major step against Kotak Bank, what the bank has to say, and what impact this decision will have on customers.

Why the Action Against Kotak Bank:

The decision against Kotak Mahindra Bank by the RBI comes after continuous monitoring for two years, in 2022 and 2023. During this period, an IT investigation by the RBI revealed several serious deficiencies and violations of rules by Kotak Mahindra Bank, which the bank failed to address promptly and comprehensively.

During the investigation, the RBI found serious deficiencies and non-compliance in IT inventory management, patch and change management, user access management, vendor risk management, data security, data leakage prevention, strategy, business continuity, and disaster recovery management.

The RBI also stated that due to the lack of a strong IT infrastructure, Kotak Mahindra Bank's digital banking channels have repeatedly faced disruptions, causing inconvenience to customers.

Bank's Response:

Following the RBI's action, Kotak Mahindra Bank has issued a statement saying that it is strengthening its IT system through new technology. The bank also stated that it is working with the RBI to address other issues promptly.

Impact on Customers:

So, what will be the impact on bank customers? The RBI has clarified in its order that Kotak Mahindra Bank will continue to provide banking services to existing customers, including those using its credit cards. The bank has also assured existing customers that all its services will continue without any interruption and new customers can be added through branches.

In conclusion, while the RBI's action may cause some inconvenience to Kotak Mahindra Bank customers, the bank is working to resolve the issues and ensure that its services remain uninterrupted for existing customers.

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