Private sector giant Kotak Mahindra Bank has received a significant relief from the Reserve Bank of India (RBI), which has lifted the severe business ban imposed on the bank for over nine months due to concerns over its technology systems. According to reports from PTI, the RBI announced on Wednesday that it has removed the ‘cease and desist’ order, providing a welcome boost to the bank.
Kotak Mahindra Bank to Resume Issuing New Credit Cards
With the lifting of the ban, Kotak Mahindra Bank will now be able to issue new credit cards through both online and mobile banking channels. Additionally, the bank has been granted permission to onboard new customers. The RBI confirmed that it is now satisfied with the corrective actions taken by the bank. As part of its remediation efforts, Kotak Mahindra Bank had undergone an external third-party IT audit and implemented several other measures to address the concerns raised by the regulator.
The Process Behind the Ban
The imposition of business restrictions is not an immediate decision; it follows months of correspondence, warnings, and meetings with the concerned entity. Under the leadership of former RBI Governor Shaktikanta Das, the central bank had imposed similar bans on other entities, including a 15-month business suspension on HDFC Bank, the country’s largest private sector lender, which ended in March 2022. In his first policy review meeting last week, RBI Governor Sanjay Malhotra hinted at a more lenient approach, signaling that regulatory actions of this nature would not be used as frequently.
Impact on Kotak Mahindra Bank’s Credit Card Operations
The suspension had a significant impact on Kotak Mahindra Bank’s credit card business. As of December 2024, the total number of outstanding credit cards issued by the bank had dropped to just over 50 lakh, down from 59 lakh in March 2024. The bank also saw a decrease in the share of unsecured loans, which fell to 10% following the restrictions.
The lifting of the ban will allow Kotak Mahindra Bank to gradually resume its digital onboarding of new customers and the issuance of fresh credit cards, which will help restore its position in the competitive banking sector.
Conclusion
With the removal of the RBI’s restrictions, Kotak Mahindra Bank can now move forward with its expansion plans and regain the momentum lost during the ban. The RBI’s decision reflects the bank’s successful efforts to address the concerns raised, and it is now in a stronger position to serve its customers and grow its credit card portfolio.
