RBI has banned Kotak Mahindra Bank from onboarding new customers via online and mobile banking. The Reserve Bank of India said it found “serious deficiencies” in IT risk and security governance over two consecutive years at Kotak Mahindra, a prominent private sector lender that was founded by Uday Kotak, one of India’s most influential financial figures.
RBI has mentioned a recent incident in its press released banning Kotak Mahindra Bank from onboarding new customers. What is this incident all about? Let’s have a look.
On April 15, 2024, several customers of Kotak Mahindra Bank experienced difficulties using the bank’s mobile application. Frustrated, they took to social media to express their dissatisfaction, with some customers reporting issues with net banking, UPI, and debit card transactions as well.
One customer reached out to the bank on social media platform X (formerly known as Twitter), writing, “@KotakBankLtd @kotak811 @udaykotak @jay_kotakone Facing issues while logging into Kotak mobile banking app. It’s a kind request to check this issue ASAP and resolve it soon. Screenshot is attached for your reference.”
In response to the customers’ complaints, the official customer care handle of Kotak Mahindra Bank acknowledged the issue, stating, “We regret to inform you that our technical servers are currently experiencing intermittent slowness. We are working diligently to resolve the issue and restore services as soon as possible. We apologize for any inconvenience this may cause and appreciate your patience and understanding.”
When we looked into the social media platform X (formerly Twitter), we found that the users have been complaining since a very long time. You can see the tweets below.
The twitter is full of such tweets and the important thing is that these tweets are 3 to 4 years old. However, the situation took a more serious turn when the Reserve Bank of India (RBI) intervened. In a press release, the RBI disclosed that the bank had been found to be lacking in necessary operational resilience due to its failure to develop IT systems and controls in line with its growth.
Citing concerns arising from the RBI’s IT examination of the bank for the years 2022 and 2023, and the bank’s failure to address these concerns in a comprehensive and timely manner, the RBI decided to impose certain business restrictions on Kotak Mahindra Bank. These actions were taken in the interest of customers and to prevent any potential prolonged outage that could severely impact the bank’s ability to provide efficient customer service, as well as the overall digital banking and payment systems.
