RBI Lifts Curbs on Kotak Mahindra Bank, Allows New Customer Onboarding

The Reserve Bank of India (RBI) on Wednesday announced the lifting of supervisory restrictions previously imposed on Kotak Mahindra Bank, allowing the bank to resume onboarding new customers through its online channels and issue new credit cards. The restrictions had been in place since April 24, 2024, under Section 35A of the Banking Regulation Act, 1949.

Reason Behind the Restrictions

The RBI had imposed these restrictions following its IT Examination of the bank for the years 2022 and 2023. The central bank cited significant concerns and the continued failure of Kotak Mahindra Bank to address these issues in a comprehensive and timely manner. The restrictions prohibited the bank from onboarding new customers through online and mobile banking channels and from issuing new credit cards, though existing customers continued to receive services.

In its April 2024 release, the RBI highlighted serious deficiencies and non-compliances in several critical areas, including 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.

Bank’s Corrective Measures and RBI’s Review

Following the imposition of restrictions, Kotak Mahindra Bank initiated remedial measures to address the RBI’s supervisory concerns. The bank also conducted an external audit with prior approval from the RBI to validate compliance with regulatory requirements.

In its latest statement, the RBI confirmed that it was satisfied with the corrective measures undertaken by the bank. “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,” the central bank stated.

Kotak Mahindra Bank Resumes Full Operations

With the lifting of restrictions, Kotak Mahindra Bank can now fully resume its operations, including onboarding new customers through digital channels and issuing new credit cards. The development marks a significant step for the bank in restoring normal business activities after addressing regulatory concerns.

The RBI’s decision reflects confidence in the remedial measures implemented by the bank, ensuring better compliance with IT and cybersecurity frameworks in the future. Kotak Mahindra Bank is now expected to strengthen its internal IT governance and risk management processes to prevent similar issues going forward.

Stock Performance 

On February 13, 2025, Kotak Mahindra Bank share price ended 1.35% higher at ₹1,943.30. Kotak Mahindra Bank’s share price reached a 52-week high of ₹1,969.90 on February 11, 2025, and a 52-week low of ₹1,544.15 on May 03, 2024. As per BSE, the total traded volume for the stock stood at 0.49 lakh shares with a turnover of ₹9.57 crore.

At the current price, Kotak Mahindra Bank shares are trading at a price-to-earnings (P/E) ratio of 22.69x, based on its trailing 12-month earnings per share (EPS) of ₹85.66, and a price-to-book (P/B) ratio of 3.49, according to exchange data.

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