Kotak Bank goes into damage-control mode after RBI ban

The top management of Kotak Mahindra Bank has gone into damage-control mode after RBI barred the lender on Wednesday from taking new customers online and issuing fresh credit cards with immediate effect.

According to reliable sources, Chief Executive Officer and MD Ashok Vaswani has in a letter to Kotak Mahindra Bank employees attempted to allay their fears over the stringent action taken by the RBI against the bank. He has assured them that management would work on the issues raised in the RBI investigation so that they are resolved soon.

Vaswani, who succeeded Uday Kotak as the CEO recently, also mentions in the letter that the explosive growth in business through digital channels has necessitated a completely different level of tech infra, and the bank has been investing in building tech infra and in the resilience of tech platforms.

In a bid to boost the morale of the staff, the CEO has also said that Kotak Mahindra Bank will continue to onboard new customers via non-digital channels and across all products other than credit cards.

The RBI order states that business restrictions on Kotak Mahindra Bank have been imposed in the interest of customers as the Uday Kotak-controlled bank was assessed to be deficient in its IT Risk and Information Security Governance.

The RBI said stringent action has been taken to protect consumers and to prevent any possible prolonged outage which may seriously impact not only the bank’s ability to render efficient customer service but also the financial ecosystem of digital banking and payment systems, according to the RBI order.

Kotak Mahindra Bank has also issued a statement saying that the bank will work with the RBI to resolve issues at the earliest. The bank said it would commission a comprehensive audit of the bank’s IT systems under the approval and supervision of the RBI.