The recent scrutiny by the Reserve Bank of India (RBI) placing restrictions on Kotak Mahindra Bank has left customers wondering about its impact on their banking experience.
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 curbs imposed by RBI come as a result of shortcomings identified in the bank’s IT system during the years 2022 and 2023.
Here’s a breakdown of what this means for Kotak Mahindra Bank’s customers:
1) Impact on Kotak 811 accounts: Customers who hold Kotak 811 digital accounts can still access their accounts without interruption. They can use Internet Banking or the mobile banking app of Kotak Mahindra Bank .
2) Services on existing accounts: Existing savings or current account holders with Kotak Mahindra Bank will not experience any disruption in services. The bank has assured its customers that all banking facilities, including credit cards and online banking, will continue as usual.
“We want to reassure our existing customers of uninterrupted services, including credit card, mobile and Net banking,” said the bank in an official statement.
3) Opening a Kotak 811 account: New customers will not be able to open Kotak 811 digital savings accounts due to the RBI’s restrictions on online customer onboarding .
4) Opening a savings account at branches: Despite the ban on online channels, Kotak Mahindra Bank can still onboard new customers through its bank branches. So, individuals interested in opening an account can visit their nearest Kotak Mahindra Bank branch .
5) Impact on credit card services: Existing credit card holders of Kotak Mahindra Bank can renew their cards without any issues. However, the bank is not permitted to issue new credit cards until the RBI lifts the restrictions .
“The current restrictions imposed on Kotak should not have an impact on its existing customers, including those with credit cards, except for the issues faced in accessing online banking services for existing customers due to the lapses in Kotak’s IT infrastructure systems,” Kinjal Champaneria, Partner, Solomon & Co told The Economic Times.
6) Duration of restrictions: The RBI will review these restrictions once Kotak Mahindra Bank completes a comprehensive external audit and addresses all deficiencies highlighted by the audit and RBI inspections.
“The restrictions now being imposed will be reviewed upon completion of a comprehensive external audit to be commissioned by the bank with the prior approval of RBI, and remediation of all deficiencies that may be pointed out in the external audit as well as the observations contained in the RBI Inspections, to the satisfaction of the Reserve Bank,” said RBI.
Typically, this process could take six to twelve months.
“The restrictions will be reviewed upon completion of an external audit and corrective action plan to RBI’s satisfaction, which typically takes six to 12 months,” a research report by Emkay specified.
The step to bar the Kotak Mahindra Bank was taken by the RBI due to concerns raised during IT examinations and tech outages.
