RBI Strict Action: Why did RBI take this action against Kotak Mahindra Bank?
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| trending desk
Kolkata, West Bengal
Last Updated : April 25, 2024, 1:14 pm IST
On Wednesday, the Reserve Bank of India directed Kotak Mahindra Bank to immediately stop onboarding new customers and issuing new credit cards through its online and mobile banking channels.
Why RBI took action against Kotak Mahindra Bank – RBI took action under Section 35A of the Banking Regulation Act, 1949 due to concerns over IT checks 2022 and 2023. – RBI found significant deficiencies in IT inventory, patch management, user access, vendor risk, data security and disaster recovery.
RBI’s statement said – “Serious deficiencies and non-compliances were observed in IT inventory management, patch and change management, user access management, vendor risk management, data security and data leak prevention strategies, business continuity and disaster recovery rigor and drills. “
- RBI said the bank had deficiencies in its IT risk and security measures for two consecutive years. They failed to comply with the corrective action plan. Over the past two years, it has experienced frequent and significant outages in core banking systems and digital channels.
- Despite high-level engagement with the RBI, the bank has failed to build the required operational resilience. – RBI said that digital transactions, including credit card related transactions, have increased rapidly, increasing the load on IT systems.
- The RBI said it imposed the restrictions “in the interest of customers and to prevent possible prolonged outages, which could severely impact not only banks’ ability to provide efficient customer service, but also the financial ecosystem of digital banking and payment systems.” How RBI’s move may affect Kotak Mahindra Bank customers –
The RBI has barred Kotak Mahindra Bank from onboarding new customers and issuing new credit cards through its online and mobile banking channels. However, the bank will continue to serve its existing customers with credit cards. On the other hand, the central bank will review business constraints after a comprehensive external audit and remediation of deficiencies.
- First Published : April 25, 2024, 1:14 pm IST
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