Shares of Kotak Mahindra Bank decline 10% in morning trade today following the RBI action, directing the bank to stop issuing fresh credit cards and onboarding new customers through its online and mobile channels. Kotak Mahindra Bank share price made a morning low of Rs 1,658.55 and were down 9.2% at Rs 1,671.60 at 9:20 AM on the NSE.
Brokerage firm Jefferies turned cautious on Kotak Mahindra Bank after the banking regulator RBI imposed ‘significant’ restrictions on the bank, asking them to stop issuing fresh credit cards and onboarding new customers via the digital channel. Jefferies in its latest note post the announcement said that it has a Hold rating on Kotak Mahindra Bank shares and has cut its target price to Rs 1,970 from Rs 2,050 earlier.
Brokerage firm Macquarie too in its latest note on Kotak Mahindra Bank said that the RBI action directing the bank to stop issuing credit cards and onboarding customers via digital channels is a significant setback for the bank as a lot of savings accounts are opened via the 811 digital channel of the bank.
“The Reserve Bank of India has today, in exercise of its powers under Section 35A of the Banking Regulation Act, 1949, directed Kotak Mahindra Bank Limited (hereinafter referred to as ‘the bank’) to cease and desist, with immediate effect, from (i) onboarding of new customers through its online and mobile banking channels and (ii) issuing fresh credit cards. The bank shall, however, continue to provide services to its existing customers, including its credit card customers,” said RBI in its release on Wednesday.