RBI prohibits Kotak Mahindra Bank from acquiring new online customers.

The RBI has placed curbs on Kotak Mahindra Bank in the interest of the customers. The bank is directed to stop onboarding new customers through online and mobile banking channels and issuing new credit cards.

However, it will continue to serve its existing customers, including those holding credit cards. Kotak Mahindra Bank has taken measures to adopt new technologies to strengthen its IT systems and has assured existing customers of uninterrupted services, including credit card, mobile and net banking.

The bank’s branches will continue to welcome and onboard new customers but will not issue new credit cards. The RBI has identified serious deficiencies in the bank’s IT management and data security.

The bank’s digital banking channels have experienced frequent outages due to the absence of a robust IT infrastructure, inconveniencing customers. The RBI has been engaged with the bank to address these concerns but found the outcomes unsatisfactory.

The business restrictions imposed by the RBI will be reviewed after a comprehensive external audit and remediation of identified deficiencies to the satisfaction of the central bank. These restrictions are without prejudice to any other regulatory or enforcement actions that may be initiated against the bank.

Kotak Mahindra Bank was established in 1985 as Kotak Mahindra Finance and received banking license in 2003. It offers a range of services including commercial banking, stock broking, mutual funds, insurance and investment banking, with a substantial customer base and branch network.