The Reserve Bank of India lifted the restrictions placed on Kotak Mahindra Bank on February 12, allowing the bank to onboard new customers through its online channels and issue new credit cards. The restrictions were originally imposed by the RBI on April 24, 2024, under Section 35A of the Banking Regulation Act, 1949.
The RBI said: “Subsequently, the bank initiated remedial measures to address the supervisory concerns and submitted compliances to the Reserve Bank. The bank also commissioned an external audit, with prior approval of RBI, to validate the compliances. Now, having satisfied itself based on the submissions, and remedial measures undertaken by the bank, the Reserve Bank, has decided to lift the restrictions placed on Kotak Mahindra Bank Limited.”
The central bank imposed restrictions on the bank following an IT Examination by the Reserve Bank in 2022 and 2023, as well as the bank’s ongoing failure to effectively and promptly address these concerns.
In its April 24 order, the central bank had directed the lender “to cease and desist, with immediate effect,
from (i) onboarding of new customers through its online and mobile banking channels and
(ii) issuing fresh credit cards. It had added that the bank shall, however, continue to provide services to its existing customers, including its credit card customers.
Following the restrictions, the bank implemented measures in response to concerns raised about specific aspects of its operations, particularly the IT infrastructure.
Kotak Mahindra Bank promptly addressed the RBI’s concerns by implementing remedial actions and submitting required compliances. Additionally, the bank conducted an external audit, approved by the central bank, to verify compliance with regulations.
“We welcome the Reserve Bank of India’s (RBI) decision to lift the business restrictions on Kotak Mahindra Bank. This decision follows the Bank’s successful implementation of remedial measures and compliance validation through an external audit. We will continue to work closely with the RBI to shortly resume digital onboarding of new customers and issuing fresh credit cards,” Kotak Mahindra Bank spokesperson said.
Shares of Kotak Mahindra Bank closed at Rs 1,943.30, up by 1.35%.