Citing deficiency in its IT risk management, the Reserve Bak of India (RBI) on Wednesday barred Kotak Mahindra Bank from onboarding new customers through its online and mobile banking channels. A ban has also been imposed on issuing fresh credit cards with immediate effect.
As per the official statement issued by the RBI, the Kotak Mahindra Bank has been directed "to cease and desist", with immediate effect, from onboarding of new customers through its online and mobile banking channels and issuing fresh credit cards. The bank shall, however, continue to provide services to its existing customers, including its credit card users.
IT risks not addressed for two consecutive years, says RBI
According to the apex bank, these decisions came into effect following significant concerns arising out of the Reserve Bank's IT examination of the bank for the years 2022 and 2023. As per the audit reports, the Kotak Mahindra Bank reportedly failed to address these concerns in a comprehensive and timely manner.
"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's statement 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, it added.
Services to remain uninterrupted: Kotak Mahindra Bank
Responding to RBI's order, Kotan Mahindra Bank asserted that they the process were adopting new technologies to further strengthen its IT systems was underway.
Most importantly, the bank assured its existing customers that services would continue without any disruptions and said new customers can be onboarded at its branches.
"We have received an order from the RBI which directs us to temporarily pause onboarding of new customers though our online and mobile banking channels and issuance of fresh credit cards. The Bank has taken measures for adoption of new technologies to strengthen its IT systems and will continue to work with RBI to swiftly resolve balance issues at the earliest," Kotak Mahindra Bank said in a statement.
"We want to reassure our existing customers of uninterrupted services, including credit card, mobile and net banking. Our branches continue to welcome and onboard new customers, providing them with all the Bank's services, apart from issuance of new credit cards," it added.
