RBI cracks down on Kotak Mahindra Bank
In a major regulatory move, the Reserve Bank of India (RBI) on Wednesday directed Kotak Mahindra Bank to stop onboarding new customers through its online and mobile banking channels and also barred it from issuing fresh credit cards, with an immediate effect.
The RBI said the bank was found to be deficient in its IT Risk and Information Security Governance for the years 2022 and 2023.
These actions were based on significant concerns arising out of the RBI’s IT examination of the bank for Kotak Mahindra Bank and the continued failure on the part of the bank to address these concerns in a comprehensive and timely manner, the RBI said in a release.
“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,” the RBI said.
During the subsequent assessments, the bank was found to be significantly non-compliant with the corrective action plans issued by the RBI for 2022 and 2023, as the compliances submitted by the bank were found to be either inadequate, incorrect, or not sustained, the release said.
“In the absence of a robust IT infrastructure and IT risk management framework, the bank’s Core Banking System (CBS) and its online and digital banking channels have suffered frequent and significant outages in the last two years, the recent one being a service disruption on April 15, 2024, resulting in serious customer inconveniences,” the regulator said.
The RBI found the private sector lender to be materially deficient in building necessary operational resilience on account of its failure to build IT systems and controls commensurate with its growth.
In the past two years, the RBI has been in continuous high-level engagement with the bank on all these concerns with a view to strengthening its IT resilience, but the outcomes have been far from satisfactory, the release said.
It is also observed that, of late, there has been rapid growth in the volume of the bank’s digital transactions, including transactions pertaining to credit cards, which is building further load on the IT systems.
The RBI said it has decided to place certain business restrictions on the bank in the interest of customers and to prevent any possible prolonged outage which may seriously impact not only the bank’s ability to render efficient customer service but also the financial ecosystem of digital banking and payment systems.
The regulator said the bank, however, will continue to provide services to its existing customers, including its credit card customers.
For all the latest updates, download PGurus App.
- Karnataka Deputy CM D K Shivakumar slaps party worker; video goes viral - May 5, 2024
- Another jolt to Congress as its National media coordinator Radhika Khera quits party alleging ‘mistreatment’ over Ram Mandir visit - May 5, 2024
- 90 Samajwadi Party workers booked for ‘insulting’ Maharana Pratap statue in UP’s Mainpuri - May 5, 2024
