Shared of Kotak Mahindra Bank are expected to take a hit tomorrow following the RBI’s (Reserve Bank of India) announcement directing the bank to stop onboarding any new customers through its digital channels and also issuing any fresh credit cards until its complies with the requirements mentioned. Kotak Mahindra Share price ended higher by 1.6% or Rs 29.7 at Rs 1,842.80.
“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.
The regulator said that it has found “serious deficiencies and non-compliances” in the bank, leading to the decision announced today. RBI said, “Significant” concerns arising from the central bank’s IT examination for two consecutive years i.e. 2022 and 2023. The RBI noted “continued failures” on the part of the bank to address the concerns “comprehensively and in a timely manner.”
The regulator further stated in its release that it has been in continuous high-level engagement with the Kotak Mahindra Bank on all these concerns with a view to strengthening its IT resilience, but the outcomes have been far from satisfactory. Of late, there has been rapid growth in the volume of the bank’s digital transactions, including transactions pertaining to credit cards, which is building further load on the IT systems, RBI added.