Leaders Online Desk: Citing data security concerns and lack of IT infrastructure, the Reserve Bank of India (RBI) on Wednesday barred Kotak Mahindra Bank from adding new customers and issuing new credit cards with immediate effect. Meanwhile, the bank can continue to serve its existing customers, who are credit card holders.
Shares of Kotak Mahindra Bank tumbled in Thursday morning trade due to the RBI restriction. Shares of Kotak Mahindra Bank (Kotak Mahindra Bank Share Price) fell by as much as 12 percent to Rs 1,620 in early trade. Around 10 am, the stock was trading at Rs 1,660, down 10 percent on the BSE Sensex.
Meanwhile, the Sensex is trading up 200 points at 74,000 in Thursday's morning trade. While Nifty reached 22,450.
The Reserve Bank of India on Wednesday (April 24) banned Kotak Mahindra Bank from issuing credit cards through online and mobile banking. At the same time, the bank also ordered not to open accounts of new customers online. The Reserve Bank of India took this action for security reasons.
The Reserve Bank of India on Wednesday ordered private bank Kotak Mahindra not to open new credit cards and online customer accounts. Due to this, Kotak Mahindra Bank was hit hard. Kotak Mahindra Bank is said to have taken this action due to IT-related security reasons in Suvindha, which is offered to customers in the online banking sector.
RBI had found errors in Kotak Mahindra Bank's IT system. RBI had also sought a reply from Kotak Mahindra Bank in this matter. But RBI was not satisfied with the reply given by Kotak Mahindra Bank. The RBI took this action after an IT system audit in 2022 and 2023. This action was taken under Section 35A of the Banking Regulation Act, 1949.