Kotak Bank : After RBI’s BAN, Know what will STOP working, what will be INTACT

newsith.com

8 months ago

Kotak Bank : What is the BAN from Reserve Bank of India?

Kotak Mahindra Bank was directed by the RBI to stop signing up new customers via its online and mobile banking platforms and to stop issuing fresh credit cards with immediate effect. The restrictions imposed by RBI comes as a result of shortcomings identified in the bank’s IT system during the years 2022 and 2023.

Why did the RBI ban Kotak?

The compliance statements submitted by the bank were inadequate, incorrect or not sustained. Consequently, the RBI barred Kotak Mahindra Bank from signing up new customers through its online and mobile banking channels, and issuing fresh credit cards, among the toughest curbs imposed on a scheduled bank.

The bank will continue to provide some services to its existing clients, including credit card customers. But if you have applied for a loan or to open an account online just before the RBI’s action, you need to check the status of your application. You might have to move your loan or account opening application to a branch channel, which could lead to a delay in the process.

Kotak Mahindra Bank customers received a shock on April 24 when the Reserve Bank of India (RBI) barred the lender from taking on new customers through its online and mobile banking channels, and from issuing fresh credit cards, citing serious deficiencies and issues with compliance regarding its technology platforms. These actions followed the RBI’s IT examination of the bank for 2022 and 2023 and the continued failure on the part of the bank to address these concerns in a comprehensive and timely manner, the central bank said.

On April 15, the digital services of Kotak Mahindra Bank were disrupted again, resulting in serious inconvenience to customer. This could have triggered the central bank to take the tough disciplinary action.

A statement from the bank mentioned that it was adopting new technologies to strengthen its IT systems and would continue to work with the RBI to swiftly resolve pending issues at the earliest.

However, the central bank’s action has led to some confusion in customers’ minds when it comes to using Kotak Mahindra Bank’s digital channels. What should current and prospective customers, especially loan and credit card applicants, do now?

Will the current supervisory action affect existing customers and their use of the bank’s digital services?

There is no problem with the bank’s digital services if you have a savings account, salary account, loan account or a credit card.

A statement from Kotak Mahindra Bank said, “We want to re-assure our existing customers of uninterrupted services, including credit card, mobile and net banking. Our branches continue to welcome and onboard new customers, providing them with all the Bank’s services, other than issuance of new credit cards.”

When are the restrictions on issuance of new credit cards and onboarding of new customers through its online and mobile banking channels expected to be lifted?

Neither the regulator nor the bank has indicated any timeline yet. If we look at an example in the case of HDFC Bank, which faced similar restrictions on the card issuance because of some restrictions on its tech platform, it took them seven to eight months to get a partial reprieve and about 15 months to get a full clearance. “Since the issues highlighted are quite varied, one can expect at least 10-12 months for the bank to take to get the regulator to lift all restrictions,” Garg added.

See the video (credits) NDTV Profit :

Link : https://www.youtube.com/watch?v=9CsQQYNuWMQ