Kotak Mahindra Bank adopts new technology and assures existing customers amid RBI action

Following the Reserve Bank of India's (RBI) announcement of business restrictions on Kotak Mahindra Bank (KMB), the bank has assured that it has taken measures to strengthen its IT systems and will collaborate with the regulator to resolve issues at the earliest.

In response to the regulatory action, Kotak Mahindra Bank released a statement, saying, "The Bank has taken measures for the adoption of new technologies to strengthen its IT systems and will continue to work with RBI to swiftly resolve balance issues at the earliest."

Additionally, the bank assured its existing customers that there would be no impact on services. "We want to reassure our existing customers of uninterrupted services, including credit card, mobile, and net banking. Our branches continue to welcome and onboard new customers, providing them with all the Bank’s services, apart from the issuance of new credit cards," the bank stated.

The RBI had barred Kotak Mahindra Bank from onboarding new customers through its online and mobile banking channels and issuing fresh credit cards. This action was taken due to supervisory concerns over the bank's technology platforms. The central bank’s actions followed an examination of the bank's IT systems over the last two years and the bank’s “continued failure” to address concerns, the RBI said.

The ban, however, will not impact existing customers, and Kotak can continue to provide services to them, including its credit card customers, according to the RBI.

Explaining the action, the RBI stated, "These actions are necessitated based on significant concerns arising out of Reserve Bank’s IT Examination of the bank for the years 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 management, patch and change management, user access management, vendor risk management, data security and data leak prevention strategy, business continuity, and disaster recovery rigor and drill, and so on.

During subsequent assessments, Kotak Mahindra was found to be significantly non-compliant with the corrective action plans issued by the Reserve Bank for the years 2022 and 2023, as the compliances submitted by the bank were found to be either inadequate, incorrect, or not sustained, the central bank said.