RBI Barred Kotak From Issuing New Credit Cards
By: Geetanjali
In a statement on Wednesday, April 24, 2024, RBI (Reserve Bank of India) restricted Kotak Mahindra Bank from housing new costumes and also barred the bank from issuing new credit cards to its new and existing users through its mobile and online platforms, with immediate application.
RBI stated that, “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”.
Adding it said,”The bank shall, however, continue to provide services to its existing customers, including its credit card customers,” said RBI.
This step came as a response after Kotak issued more than 59 lakh credit cards by the end of March 2024, though for the last two years 2022 and 2023, the bank was found to be non-compliant with the corrective action plan issued by the RBI, said RBI in its statement.
“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. For two consecutive years 2022 and 2023 , the bank was assessed to be deficient in its IT Risk and Information Security Governance, contrary to requirements under Regulatory guidelines,” stated RBI.
The central bank on April 15, reported that the Kotak Mahindra Bank’s main banking system and digital and mobile banking system suffered frequent and extreme losses over the last two years.
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