RBI Orders Kotak Mahindra Bank to Halt Onboarding New Online Customers
Shares Plummet Following Enforcement Action
Kotak Mahindra Bank's stock price experienced a significant decline of over 10% on Thursday following the announcement that the Reserve Bank of India (RBI) had taken strict action against the bank.
The RBI ordered Kotak Mahindra Bank to immediately stop accepting new customers through online channels. The central bank also imposed a ban on the bank from increasing its credit card lending beyond the current levels and from increasing its lending under the co-lending model with non-banking financial companies.
The RBI's action comes in response to concerns over Kotak Mahindra Bank's compliance with certain regulatory requirements, including those related to KYC (Know Your Customer) norms and loan recovery processes. The bank has been given time until March 31, 2023, to rectify the deficiencies identified by the RBI.
In a statement, Kotak Mahindra Bank acknowledged the RBI's action and expressed its commitment to complying with the regulatory requirements. The bank stated that it would "take all necessary steps to strengthen our compliance function and ensure that we operate in full compliance with all applicable laws and regulations."
The RBI's action against Kotak Mahindra Bank has raised concerns among investors and analysts about the bank's overall compliance practices and the potential for further regulatory action against other banks. It remains to be seen how the bank will respond to the RBI's directives and what the long-term impact will be on its operations and reputation.
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