May 29, 2024
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RBI Imposes Restrictions on Kotak Mahindra Bank Due to IT Deficiencies

The Reserve Bank of India (RBI) has directed Kotak Mahindra Bank to halt the onboarding of new customers through its online and mobile banking platforms and issued a suspension on the issuance of fresh credit cards. This stringent action comes as a result of significant IT deficiencies identified during the RBI’s IT Examination of the bank for the years 2022 and 2023. The central bank highlighted serious deficiencies in IT inventory management, patch and change management, and other critical IT areas, which have led to frequent service disruptions, including a major outage on April 15, 2024.

The RBI stated that the bank’s continued failure to address these issues “in a comprehensive and timely manner” necessitated the imposed restrictions. Kotak Mahindra Bank has been found lacking in IT Risk and Information Security Governance for two consecutive years, which has compromised data security and the efficiency of its Core Banking System (CBS).

For existing Kotak Mahindra Bank customers, services will continue without interruption. However, the restrictions on new customer onboarding and credit card issuance will remain until the bank addresses and rectifies the identified deficiencies to the satisfaction of the Reserve Bank. This move underscores the RBI’s commitment to ensuring robust IT infrastructure and risk management practices in the banking sector.

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