RBI directs Kotak Mahindra Bank to halt new customer onboarding, credit card issuance

The Reserve Bank of India (RBI) has directed Kotak Mahindra Bank to suspend the onboarding of new customers through its online and mobile banking channels, along with the issuance of fresh credit cards. Existing customers will still receive services, including credit card facilities, as per the RBI's order.

The RBI cited concerns arising from its IT examination of the bank for the years 2022 and 2023, noting ongoing failures by Kotak Mahindra Bank to address these concerns effectively and promptly.

The RBI said that 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, in the bank. 

"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 RBI said.