RBI’s Strict Measures: Kotak Bank Cannot Add Digital Customers

The Reserve Bank of India (RBI) has imposed tough restrictions on Kotak Mahindra Bank. They are not allowed to sign up new customers online or through mobile banking. Also, they cannot issue new credit cards. This is because Kotak has not fixed its IT systems despite continuous reminders from RBI over the past two years.

According to RBI, there are serious issues and non-compliances in Kotak’s operations. As a result, the bank has been asked to stop these functions immediately. This news came out after the stock market closed on Wednesday. Despite this, Kotak’s stock price increased by 1.64%.

Kotak Mahindra Bank assured its customers that it would resolve the issue quickly. They stated that their existing customers would not face any service interruptions, including credit card, mobile, and net banking services.

The restrictions will remain until an external audit is conducted and all deficiencies are fixed, as per RBI. Over the last few months, RBI has taken strict actions against several other financial institutions for non-compliance.

Kotak Mahindra Bank’s digital account, Kotak811, was launched in 2017 and gained significant popularity. However, the bank has faced frequent IT outages in recent years, causing inconvenience to customers.

These restrictions come after Ashok Vaswani took charge as MD and CEO of Kotak Mahindra Bank. However, the issues mentioned by RBI are not related to his tenure. RBI imposed these restrictions to protect customers’ interests and ensure the stability of digital banking and payment systems.

The bank will undergo an external audit approved by RBI, and restrictions will be lifted based on the audit’s findings and RBI’s observations.