Worried more about reputational impact than financial impact, says Kotak Bank's Vasvani

On April 24, the RBI barred the bank from onboarding new customers through its online as well as mobile banking channels.

After the Reserve Bank of India (RBI) action, Kotak Mahindra Bank is more worried about reputational impact than financial impact, said Ashok Vasvani, MD and CEO.

"The RBI action had an impact on the franchise and reputation of the Bank. Our credit card and 811 business will be impacted. I am more worried about the reputational impact than I am about the financial impact. Financial impact and the scheme of things will be relatively small, Vasvani said at the post-results press conference on May 4.

On April 24, the RBI barred the bank from onboarding new customers through its online as well as mobile banking channels. The central bank also restricted the bank from issuing fresh credit cards.

The RBI, in its examination of the bank's IT systems over the last two years, said that the bank continuously failed to address concerns raised by the regulator.

Focus on cross sell 

On losing the market competition, Vasvani said that the bank intends to go tight on business with existing customers. "We will lose some new market share. But we intend to get tight with existing customers. There we will have some market gain. And net net, we will come out okay," Vasvani said.
With the restrictions imposed by the RBI, the bank will focus on cross sell to existing customers. "We will focus on existing customers and enhance our relationship," Vasvani said.

Shanti Ekambaram, whole time director and deputy managing director, said that the focus of Kotak811 will be on cross selling.

RBI's anvil 

The central bank said: "These actions are necessitated on the basis of the significant concerns arising out of the Reserve Bank’s IT examination of the bank for 2022 and 2023 and the continued failure on the part of the bank to address these concerns in a comprehensive and timely manner."

According to the central bank, serious deficiencies and non-compliance were observed in the areas of IT inventory, patch and change, user access and vendor risk management. There were also gaps in data security and data leak prevention strategy, business continuity, and disaster recovery rigour and drill.