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Kotak Mahindra Bank RBI News:  The Reserve Bank of India (RBI) has instructed Kotak Mahindra Bank to immediately stop accepting new customers and issuing new credit cards through its online and mobile banking channels. The central bank has prohibited the private sector lender from making new issuances in 2022 and 2023 due to deficiencies in the bank's IT system.

Does this have an impact on existing customers?

However, the RBI restriction order raises doubts for existing bank customers about the safety of money in their respective accounts and the functionality of their credit cards. Even though Kotak Mahindra Bank cannot accept new customers or issue new credit cards, existing bank customers who have accounts and other financial assets need not be concerned about the most recent RBI order.
In its statement on Wednesday, the RBI, in explaining the restrictions imposed on Kotak Mahindra Bank, also stated that The bank, however, will continue to provide services to its existing customers, including its credit card customers.

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Why did the RBI take stringent measures against Kotak Mahindra Bank?

-The RBI's decision was prompted by major deficiencies and non-compliances discovered during the central bank's IT audit of Kotak Mahindra Bank for two consecutive years, 2022 and 2023. The bank failed to address these concerns in a comprehensive and timely manner consistently.

-The RBI found major deficiencies in areas like IT inventory management, patch and change management, user access management, vendor risk management, data security and data leakage prevention strategies, business continuity, and disaster recovery rigor and drills.

-Despite the RBI issuing corrective action plans for both years, subsequent evaluations revealed that the bank remained largely non-compliant, with inadequate, inaccurate, or inconsistent compliance.

Also read: RBI Bars Kotak Mahindra Bank From Onboarding New Online Customers, Issuing Fresh Credit Cards