Kotak Mahindra Bank Barred By RBI From Onboarding New Online Customers

Citing data security concerns and deficient IT infrastructure, the Reserve Bank of India has barred Kotak Mahindra Bank from onboarding new customers and issuing new credit cards with immediate effect. The bank can, however, continue to serve its customers, including those holding credit cards.

"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 (1) 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," the central bank said in a release.

The RBI said the actions are based on "significant concerns arising out of Reserve Bank's IT Examination of the bank for the years 2022 and 2023 and the continued failure on part of the bank to address these concerns in a comprehensive and timely manner".