The bank said that it believes that the directions will not materially impact its overall business and it will step-up investments to fortify its IT systems.
The bank was under scanner after the central bank conducted an examination of its IT systems in the last two years.
Private lender Kotak Mahindra Bank on Saturday said that it has taken a note of the Reserve Bank of India’s (RBI) recent order that stopped it from onboarding new customers through online and mobile banking channels and issuing fresh credit cards. The bank said that it is looking to redeploy resources to minimise business impact of the RBI action.
The bank said that it believes that the directions will not materially impact its overall business and it will step-up investments to fortify its IT systems.
The banks said: “The order does not impact our: a) servicing and cross-sell of products (excl. new credit cards) to the existing customer base through all channels; b) on-boarding of new customers through other than online / mobile banking channels.”
It added: “We are totally committed to working with all our regulators to achieve the required technology standards.”
It further said:
> Bank will step-up investments to fortify its IT systems. The focus is on:
> Accelerate execution of the comprehensive plan for core banking resilience
> Demonstrate sustainable compliance to Baseline Cyber Security Framework for Banks
> Continue to strengthen digital payment security controls
Last week, RBI restricted Kotak Mahindra Bank from onboarding new customers through online and mobile banking channels. It also directed the bank to stop issuing new credit cards.
The bank was under scanner after the central bank conducted an examination of its IT systems in the last two years. The RBI noted that the bank’s “continued failure” to address concerns.
In a press release dated April 24, 2024, the RBI stated,”…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 rigour and drill, etc. For two consecutive years, the bank was assessed to be deficient in its IT Risk and Information Security Governance, contrary to requirements under Regulatory guidelines. During the subsequent assessments, 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 for adoption of new technologies to strengthen its IT systems.
“We have received an order from the RBI which directs us to temporarily pause onboarding of new customers through our online and mobile banking channels and issuance of fresh credit cards. The Bank has taken measures for adoption of new technologies to strengthen its IT systems and will continue to work with RBI to swiftly resolve balance issues at the earliest. We want to reassure our existing customers of uninterrupted services, including credit card, mobile and net banking. Our branches continue to welcome and onboard new customers, providing them with all the Bank’s services, other than the issuance of new credit cards,” the bank said in the statement.
Ashok Vaswani, MD and CEO, Kotak Mahindra Bank (KMB), on April 25 said that the bank is actively resolving the tech issues raised by the RBI and is actively in touch with the banking regulator to address concerns.
“I wish to emphasize that our operations that our operations continue uninterrupted for all existing customers across all our channels. You continue to have access to all your existing banking services, including branches, bank accounts, credit, debit cards, ATMs, mobile and net bankings, Vaswani said in a post on X.
He added: “Rest assured, we are actively working to address the concerns raises and are in constant communication with the regulator to resolve any issues promptly.”
Regarding new credit cards, he said: “However, we have temporarily paused the issuance of new credit cards.”
Shares of the bank closed for trading on Friday at Rs 1,547.25, down by 1.81 percent.
