Poor security, RBI debars Kotak Mahindra Bank from opening a/cs online
Vijay C Roy
Chandigarh, April 24
After finding the private sector lender lacking in IT risk and information security governance for two consecutive years, the Reserve Bank of India has asked Kotak Mahindra Bank not to issue new credit cards and barred it from adding fresh customers through the online and mobile banking channels.
Existing customers won’t be affected
- Bank found lacking in IT risk and info security for two years
- There were frequent outages in Kotak’s core banking system
- Bank’s existing customers won’t be hit, says the RBI
The step is expected to impact the bank’s customer acquisition targets as most of the onboardings happen online and through mobile banking channels. This may, in turn, affect its growth in the short run. Also, it will impact the lender’s co-branded card deals. However, the RBI clarified that the bank can provide services, including related to credit cards, to existing customers.
In a statement, the RBI said the action was necessary as the bank had failed to plug gaps in its information and technology (IT) set-up. There were frequent outages in the bank’s core banking system and online channels over the past two years, the recent one being on April 15, which hassled customers, the RBI said.
“Over the past two years, the RBI engaged continuously with the bank on all these concerns, but the outcome was far from satisfactory. It was also found that, of late, there was rapid growth in the volume of the bank’s digital transactions, including pertaining to credit cards, which is building further load on its IT system,” the RBI said.
Earlier, the RBI had barred HDFC Bank from launching new digital initiatives and issuing credit cards on December 2, 2020. The restrictions were lifted upon compliance with norms.
