The bank will continue to service its existing customers, including those with credit cards, the banking sector regulator stated.
This action follows concerns identified during RBI's examinations of the bank's IT infrastructure in 2022 and 2023. The report cites serious deficiencies in areas like IT inventory management, data security, and business continuity planning. The bank was found to be non-compliant with corrective action plans issued by RBI in previous years.
These shortcomings have resulted in frequent outages of the bank's Core Banking System and digital channels, causing inconvenience to customers. The RBI's decision aims to protect customers and the financial system from potential risks associated with these IT vulnerabilities.
The restrictions will be reviewed upon completion of an external audit commissioned by the bank with RBI's approval. The audit will assess the bank's progress in addressing the identified deficiencies. The RBI may take further regulatory action based on the audit's findings.
In an regulatory filing made after market hours yesterday, Kotak Mahindra Bank said: “The bank has taken concrete steps to adopt new technologies to strengthen its IT systems and will continue to work with RBI to swiftly resolve balance issues at the earliest.
The bank would like to reassure its existing customers of uninterrupted services, including credit card, mobile and net banking. The bank’s branches will continue to onboard new customers, providing them with all the bank’s services, except issuance of new credit cards.
The bank believes that these directions will not materially impact its overall business.”