The Kotak Mahindra Bank bank said it believes the directions will have no significant impact on its overall business and will increase investments to strengthen its IT systems.
Kotak Mahindra Bank on RBI’s order
Private lender Kotak Mahindra Bank on Saturday said it has taken note of the Reserve Bank of India’s (RBI) recent order barring it from adding new customers and issuing new credit cards through online and mobile banking channels. The bank said it is looking at redeploying resources to mitigate the business impact of the RBI action.
Kotak Mahindra Bank on the RBI’s guideline
The Kotak Mahindra Bank said it believes the directions will have no significant impact on its overall business and will increase investments to strengthen its IT systems.
The Kotak Mahindra Bank banks said: “This order does not impact our: a) servicing and cross-selling of products (except new credit cards) to existing customer base through all channels; b) adding new customers through channels other than online/mobile banking channels.”
It further said: “We are fully committed to working with all our regulators to achieve the required technology standards.”
It further said:
The bank will increase investments to strengthen its IT systems. The focus is on:
Accelerating the implementation of the comprehensive plan for core banking resilience
Demonstrating ongoing compliance to the Baseline Cybersecurity Framework for Banks
Continuing to strengthen digital payment security controls
Last week, the RBI barred Kotak Mahindra Bank from adding new customers through online and mobile banking channels. It also directed the bank to stop issuing new credit cards.
The bank had come under scrutiny after the central bank examined its IT systems over the past two years. The RBI said the bank had “continuously failed” to address the concerns.
In a press release dated April 24, 2024, RBI said, “…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 hardening and drills etc.
For two consecutive years, the bank was assessed to be deficient in its IT risk and information security governance, contrary to the requirements under the regulatory guidelines. During the subsequent assessment, the bank was found to be significantly non-compliant with the corrective action plans issued by the Reserve Bank for the years 2022 and 2023, as the compliances submitted by the bank were found to be either inadequate, incorrect or not sustained.” The bank had earlier said that it has taken measures to adopt new technologies to strengthen its IT systems.
Kotak Mahindra Bank said in the statement
The bank said in the statement, “We have received an order from RBI, directing us to temporarily stop adding new customers and issuing new credit cards through our online and mobile banking channels. The bank has taken steps to adopt new technologies to strengthen its IT systems and will continue to work with RBI to resolve the balance issues at the earliest.
We would like to assure our existing customers of uninterrupted services including credit cards, mobile and net banking. Our branches continue to welcome and onboard new customers, providing them with all the banking services including issuing new credit cards.
” Kotak Mahindra Bank (KMB) MD and CEO Ashok Vaswani on April 25 said the bank is actively resolving the technical issues raised by RBI and is actively in touch with the banking regulator to address the concerns. “I would like to emphasise that our operations continue uninterrupted for all existing customers across all our channels. You will continue to have access to all your existing banking services, including branches, bank accounts, credit, debit cards, ATMs, mobile and net banking,” Vaswani said in a post on X.
He further added: “Rest assured, we are actively working to address concerns and are in constant touch with the regulator to resolve any issues promptly.”
Regarding new credit cards, he said: “However, we have temporarily put a halt on issuance of new credit cards.”
On Friday, the bank’s shares closed 1.81 per cent lower at Rs 1,547.25.
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