RBI Lifts Ban on Kotak Mahindra Bank: The Reserve Bank of India RBI lifted the ban on Kotak Mahindra Bank on Wednesday (February 12). In April 2024, the RBI, in exercise of its powers under Section 35A of the Banking Regulation Act, 1949, imposed certain commercial restrictions on Kotak Mahindra Bank Limited. The bank was directed to stop adding new customers and issuing new credit cards through its online and mobile banking channels.
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RBI Lifts Ban on Kotak Mahindra Bank: Why Was the Action Taken?
In April 2024, RBI said that these actions had been taken after serious shortcomings were found in the IT risk management and information security operations of Kotak Mahindra Bank. This step is necessary following the concerns generated by the Bank’s IT audit for the years 2022 and 2023 and the Bank’s continued failure to deal with these concerns in a timely and appropriate manner.
In such a situation, the bank was directed to stop and stop adding new customers and issuing new credit cards through its online and mobile banking with immediate effect.
RBI had Said Three Big Things on RBI Lifts Ban on Kotak Mahindra Bank
- RBI had found serious deficiencies in areas such as the bank’s IT inventory management, user access management, vendor risk management, data security, and data leak prevention strategy. This was seen for two consecutive years, but the bank could not take any concrete steps.
- In the absence of robust IT infrastructure, the bank’s core banking system (CBS) and its online and digital banking channels witnessed frequent outages over the past two years. The latest outage occurred on April 15, causing inconvenience to customers.
- Now the restrictions imposed will be reviewed after the external audit of the bank. For this external audit, the bank will have to get prior approval from RBI. The bank will also have to remove all the deficiencies pointed out in the RBI inspection and external audit.
HDFC Bank was also banned In December 2020, the RBI had also banned HDFC Bank from issuing new cards and launching new digital initiatives after repeated technology glitches. However, this ban was lifted in March 2022.
How were the December Quarter Results?
Kotak Mahindra Bank’s profit increased by 10.22 percent to Rs 4,701 crore in the December quarter. The bank’s profit has increased due to the good performance of its capital market-related units. The bank’s profit in the same quarter of the last financial year was Rs 4,265 crore and in the July-September 2024 quarter, it was Rs 5,044 crore.
The total income of the bank increased to Rs 16,050 crore in the quarter under review, which was Rs 14,096 crore in the same quarter of the last financial year. The company’s expenses stood at Rs 10,869 crore in the December quarter, compared to Rs 9,530 crore in the same quarter of the last financial year.
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