On April 24, the Reserve Bank of India banned Kotak Mahindra Bank from taking some actions such as onboarding new customers through its mobile banking and online channels and issuing new credit cards. However, this will not prevent banks from offering these services to existing customers. Apex Bank said such action was needed because of some deficiencies in Kotak Mahindra Bank’s IT system. Kotak Mahindra Bank CEO Ashok Vaswani said recently that KMB is in constant dialogue with top banks to get the required compliance results.
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The Reserve Bank of India said it noticed some “serious deficiencies and irregularities” in KMB’s IT inventory, leakage prevention strategies, business continuity, user access management, disaster recovery rigor and other aspects. The regulator observed all this through more than two years of inspections of KMB’s system. The Reserve Bank of India said Kotak Mahindra Bank has consistently failed to address these issues in a timely and comprehensive manner. The bank was also seen as “not complying with the Reserve Bank of India’s subsequent recommendations or corrective action plans”. The Corrective Action Plan, abbreviated as CAP, is part of the Reserve Bank of India’s plan to strengthen physical intervention.
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The Reserve Bank of India said the compliance provided by Mahindra Bank in Kotak was either incorrect or insufficient. In addition, the bank’s online banking channels were severely affected by the lack of strong risk management systems and IT infrastructure. The most recent such incident occurred on April 15. The bank’s customer service representative said on the X platform (formerly Twitter) that the bank’s technology services are actually facing “intermittent slowness.” The measures taken so far will be considered in an external audit commissioned by the bank with the concurrence of the Reserve Bank of India to analyze the remedial measures taken.
According to S&P Global Ratings, RBI’s regulatory actions could hamper banks’ credit growth and profitability. It also further suggests that credit cards are actually one of Kotak Mahindra Bank’s higher-earning targeted growth segments. As of the last day of last year, the portfolio surged 52% year-on-year, while total loan growth exceeded 19%. The RBI’s action may actually make KMB more reliant on the expansion of its physical branch network.
Source: https://truongnguyenbinhkhiem.edu.vn
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