Reserve Bank of India on February 12 lifted restrictions on Kotak Mahindra Bank that had barred the lender from onboarding new customers through its online channels and issuing new credit cards. RBI had placed the restrictions on the bank on April 24, 2024.
The Mumbai-headquartered bank was directed to cease and desist from onboarding of new customers through its online and mobile banking channels, and issuing fresh credit cards.
"Subsequently, the bank initiated remedial measures to address the supervisory concerns and submitted compliances to the Reserve Bank. The bank also commissioned an external audit, with prior approval of RBI, to validate the compliances. Now, having satisfied itself based on the submissions, and remedial measures undertaken by the bank, the Reserve Bank, has decided to lift the restrictions placed on Kotak Mahindra Bank Limited," said RBI in a statement.
The restriction by the central bank arise after Reserve Bank’s IT Examination of the bank for the years 2022 and 2023 and the continued failure on part of the bank to address these concerns in a comprehensive and timely manner.
"Serious deficiencies and non-compliances were observed in the areas of IT inventory management, patch and change management, user access management, vendor risk management, data security and data leak prevention strategy, business continuity and disaster recovery rigour and drill, etc. For two consecutive years, the bank was assessed to be deficient in its IT Risk and Information Security Governance, contrary to requirements under Regulatory guidelines," RBI had said in April 2024.
Further, the central bank had said that in the absence of a robust IT infrastructure and IT Risk Management framework, the bank’s Core Banking System (CBS) and its online and digital banking channels have suffered frequent and significant outages in the last two years, the recent one being a service disruption on April 15, 2024, resulting in serious customer inconveniences.
The bank is found to be materially deficient in building necessary operational resilience on account of its failure to build IT systems and controls commensurate with its growth, RBI said.
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