- By Aditya Pratap Singh
- Thu, 25 Apr 2024 10:50 AM (IST)
- Source:JND
Kotak Bank Share Price: Kotak Mahindra Bank's stock fell 10% in early trade on Thursday after the Reserve Bank of India (RBI) took punitive action against it. The stock was trading at 1,665.80, down 9.60% at 10:32 a.m. on the National Stock Exchange (NSE).
The RBI on Wednesday directed Kotak Mahindra Bank to stop adding new customers and issuing new credit cards through its online and mobile banking channels with immediate effect. The central bank has barred the private sector lender from issuing fresh credit cards in 2022 and 2023 due to deficiencies in the bank's IT system.
The RBI on Wednesday (April 24) barred Kotak Mahindra Bank from onboarding new customers through its online and mobile banking channels and issuing new credit cards with immediate effect after it found "serious lapses" in the lender's IT risk management system.
The RBI, which regulates the banking sector, has issued an immediate "cease" order to Kotak Mahindra Bank due to serious concerns arising from the bank's failure to address concerns in its IT management. It added that the bank was assessed as deficient in its IT risk and information security governance for two years - 2022 and 2023 - which was contrary to the requirements under regulatory guidelines.
Also Read: Kotak Mahindra Bank Faces RBI Action: What Happens To Customer's Money After Restrictions | Details
Stating its concerns, the RBI further said that it has been in high-level engagement with the bank for the last two years, but the results were not satisfactory. The central bank said it has also been observed that, recently, the volume of digital transactions of the bank has increased rapidly, including credit card-related transactions, leading to additional load on the IT systems.
Meanwhile, Kotak Mahindra Bank believes that these instructions will not have any significant impact on its overall business.
The bank has taken concrete steps to adopt new technologies to strengthen its IT systems and will continue to work with the RBI to resolve the remaining issues as soon as possible. Kotak Mahindra Bank said in a stock exchange filing that it wants to reassure its existing customers about seamless services including credit cards, and mobile and net banking.
