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The Reserve Bank of India (RBI) has instructed Kotak Mahindra Bank to cease digitally onboarding new customers and to suspend the issuance of new credit cards due to deficiencies in the bank’s IT systems.
According to the RBI, examinations conducted in 2022 and 2023 identified unresolved issues within Kotak Mahindra’s IT infrastructure, which the bank has failed to adequately address.
In a statement, the central bank noted, “For two consecutive years, the bank was found to be lacking in its IT Risk and Information Security Governance.”
The RBI’s inspection revealed significant shortcomings and noncompliance in various aspects of IT management, including inventory management, patch and change management, user access management, vendor risk management, data security, and business continuity planning.
Kotak Mahindra Bank, ranked as India’s fourth-largest private lender, has stated that it is actively implementing new technology to bolster its IT systems. Existing customers will not be impacted by the directive, and prospective customers are advised to visit branches for onboarding procedures.
This action by the RBI draws parallels to a similar measure taken against HDFC Bank in 2020. Following a prolonged IT outage, HDFC Bank was prohibited from opening new credit card accounts or introducing fresh digital banking products by the RBI.
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