The Reserve Bank of India (RBI) on Wednesday announced that it has lifted supervisory restrictions imposed on Kotak Mahindra Bank, thereby allowing the Bank to resume onboarding new customers through its online channels and issuing new credit cards. The central bank had, in exercise of its powers under Section 35A of the Banking Regulation Act, 1949, imposed certain business restrictions on Kotak Mahindra Bank. The restrictions were placed on April 24, 2024.

In a release, RBI said, “Subsequently, the bank initiated remedial measures to address the supervisory concerns and submitted compliances to the Reserve Bank. The bank also commissioned an external Audit, with prior approval of RBI, to validate the compliances. Now, having satisfied itself based on the submissions, and remedial measures undertaken by the bank, the Reserve Bank, has decided to lift the aforementioned restrictions placed on Kotak Mahindra Bank Limited.”

Earlier on April 24, the RBI had imposed restrictions on Kotak Mahindra Bank under Section 35A of the Banking Regulation Act, 1949. It had said that actions were necessitated based on significant concerns arising out of Reserve Bank’s IT Examination of the bank for the years 2022 and 2023 and the continued failure on part of the bank to address these concerns in a comprehensive and timely manner.

The RBI directed the lender “to cease and desist, with immediate effect, from (i) onboarding of new customers through its online and mobile banking channels and (ii) issuing fresh credit cards. It had added that the bank shall, however, continue to provide services to its existing customers, including its credit card customers. 

In a release, the central bank had said that serious deficiencies and non-compliances were observed in the areas of IT inventory management, patch and change management, user access management, vendor risk management, data security and data leak prevention strategy, business continuity and disaster recovery rigour and drill, etc.

Shares of Kotak Mahindra Bank were up 1.35 per cent at 5:50 pm at a trading price of Rs 1,943.30.