Kotak Mahindra Bank says ‘actively working’ on RBI directive about credit cards, digital customer acquisition

Kotak Mahindra Bank tried to assure that it remains focused on addressing the underlying IT concerns.

Kotak Mahindra Bank has clarified that it has been actively working on addressing concerns that led the Reserve Bank of India to stop the bank from issuing fresh credit cards and onboarding new customers through digital channels.

In its post-Q2 results press call, Kotak Mahindra Bank sought to provide an update regarding the RBI’s April 2024 order. The lender said that it maintains constant interaction with the RBI, providing updates on the progress of remedial measures.

Kotak Bank emphasised its focus on core banking resilience, and said that is improving its business continuity action plan, and is strengthening cybersecurity and digital payments frameworks. External auditors have been engaged to validate these improvements.

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The management further expressed optimism about resolving the issues but acknowledged that the timeline for lifting the restrictions lies with the RBI. "We are working very, very closely with the RBI, under their guidance and advice, to make sure we get to a great place on this score,” said Kotak Mahindra Bank CEO Ashok Vaswani.

While the bank cannot onboard new customers or issue fresh credit cards, it continues to serve its existing customer base, ensuring that credit card services remain uninterrupted.

The management also highlighted that 30-40% of total slippages in Q2 FY25 came from the credit card portfolio, which is being closely monitored​. “The credit card provisioning norms are clear… and we are obviously taking measures to contain the underwriting laws for the new book. And as we do that, we will see the improvement, especially from the new book,” said Vaswani.

Kotak Mahindra Bank tried to assure that it remains focused on addressing the underlying IT concerns and improving its systems, adding that the financial impact of the RBI’s directive remains in line with the bank’s initial estimates.