The Reserve Bank of India (RBI) has lifted the restrictions it had imposed on Kotak Mahindra Bank, allowing the bank to resume issuing new credit cards and adding customers via online and mobile banking.
Background: Why Was Kotak Mahindra Bank Restricted?
In April 2024, the RBI had directed Kotak Mahindra Bank to halt new customer onboarding and credit card issuance via digital channels. This action was taken under Section 35A of the Banking Regulation Act, 1949, due to serious deficiencies in IT risk management and information security operations.
The decision followed an IT investigation covering 2022 and 2023, which revealed that the bank failed to address security concerns in a timely and effective manner.
RBI’s Restrictions on Other Banks
This is not the first time the RBI has taken action against a major private bank. In December 2020, RBI had also banned HDFC Bank from issuing new credit cards and launching digital initiatives due to frequent technology-related glitches. However, these restrictions were lifted in March 2022 after the bank addressed compliance issues.
Kotak Mahindra Bank’s Financial Performance
Despite these restrictions, Kotak Mahindra Bank has continued to show strong financial performance:
✅ December 2024 Quarter Profit: ₹4,701 crore (10.22% increase YoY)
✅ Previous Year (Dec 2023) Profit: ₹4,265 crore
✅ July-September 2024 Quarter Profit: ₹5,044 crore
✅ Total Income (Dec 2024 Quarter): ₹16,050 crore (vs. ₹14,096 crore YoY)
✅ Total Expenditure: ₹10,869 crore (vs. ₹9,530 crore YoY)
The profit growth was driven by strong performance in the capital markets segment.
What This Means for Customers
Now that the restrictions have been lifted, Kotak Mahindra Bank can once again:
✅ Onboard new customers via online and mobile banking
✅ Issue new credit cards digitally
✅ Expand digital banking services
This move is expected to boost Kotak Mahindra Bank’s market presence and increase competition in the credit card segment.
Final Thoughts
With RBI lifting restrictions, Kotak Mahindra Bank can now focus on regaining customer trust and expanding its digital services. This also highlights RBI’s strict oversight on banks’ IT security and risk management practices to ensure safe and secure banking for customers.
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