Context:
Ten months since the Reserve Bank of India imposed business restrictions on Kotak Mahindra Bank, the RBI has finally removed the restrictions after complete determination of remedial measures and compliance verification.
Key Highlights:
Why Was The Restriction Imposed?
The RBI had placed curbs on Kotak Mahindra Bank for reasons related to its IT management. The RBI said that the bank had persistently failed to rectify “serious deficiencies and non-compliances” and it resulted in severe outages in 2022 and 2023, which resulted in inconvenience to customers.
RBI’s Decision to Remove Restrictions
- This meant that “cease and desist” orders levied upon Kotak Mahindra Bank were relieved, allowing the entity to continue with digital customer acquisition and credit card issuances.
- “Cease and desist” is an idiom that means to stop doing something, often due to a legal threat or order.
- Existing restrictions remains for Paytm Payments Bank.
Compliance and Remedial Measures Taken
- Kotak Mahindra Bank undertook remedial actions to address RBI’s supervisory concerns.
- The bank also ordered an outside audit, after taking RBI’s approval in advance, to authenticate its compliance.
- On the basis of these measures of correction, RBI decided to remove the curbs.
Bank’s Response
- Kotak Mahindra Bank had a positive view of RBI’s decision, committing itself to the compliance with regulators.
- The bank announced that it would resume digital customer onboarding and new credit card issuance in the near future.
With the restrictions removed, Kotak Mahindra Bank is now set to increase stakes on digital expansions and credit card products.
Source: The Hindu
