Business restrictions imposed on Kotak Mahindra Bank by the Reserve Bank of India (RBI) were lifted today after ten months. The banking regulator has lifted all the restrictions on being satisfied with the corrective measures taken by this private sector bank. Regarding this decision of RBI, Kotak Mahindra Bank said that it will continue to work with the Reserve Bank to create new customers through digital channels and issue new credit cards.
Along with this, the ban and prohibition order has been removed from all banks and non-banking financial companies except Paytm Payment Bank. After this ban, the bank presented compliance in addition to taking several corrective measures and also conducted an external audit for verification of compliance.
The RBI said in a statement, “The bank has taken corrective measures to address supervisory concerns and informed the regulator about compliance. The bank has also conducted an external audit with the prior permission of RBI to verify compliance.
The statement also said, “After being satisfied with the documents submitted by the company and corrective measures, the Reserve Bank has now decided to remove the restrictions on Kotak Mahindra Bank.” Kotak Mahindra Bank said that after the successful implementation of corrective measures by him, the regulator has taken this decision. The bank said, ‘We welcome the decision of the Reserve Bank of India to remove the business related restrictions on Kotak Mahindra Bank. The bank has taken this decision after successfully implementing corrective measures and verification of compliance through an external audit.
In April last year, the RBI imposed a ban by the bank, citing failure to remove the flaws in its information technology (IT) systems. The regulator said that due to the flaw in the IT system, the bank’s core banking system and online medium were repeatedly obstructed during the last two years, causing inconvenience to the customers.
The RBI had said that there were serious concerns after the bank’s IT investigation in 2022 and 2023, and the bank failed to overcome those concerns in a wide time. After the restrictions imposed by the Reserve Bank, by December 2024, the number of credit cards of Kotak Mahindra Bank declined to 9,78,860 cards to 50.2 lakhs, which was more than 60 lakhs in April.
After the restrictions, the bank’s net interest margin (NIM) also declined significantly. Its margin declined to 4.93 per cent in the third quarter of FY 2025, which was 5.02 per cent in the first quarter of FY 2025 and 5.28 per cent in the fourth quarter of FY 2024. In January 2024, these restrictions were imposed only a few months after Ashok Vaswani was appointed as the new MD and CEO of Kotak Mahindra Bank.
(Business Standard Private Limited has a majority stake of units controlled by Kotak family.)
First Published – February 12, 2025 | 11:00 PM IST
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(Tagstotranslate) Kotak Mahindra Bank (T) RBI Restrictions (T) Banking Regulations (T) Digital Banking (T) IT Compliance (T) Financial Sector (T) Financial Sector (T) Financial Sector (T) CRADIT CARD Issuance (T) RBI Audit (T) RBI ADIT (T) reforms