Kotak Mahindra Bank shares tank 13%; mcap erodes by Rs 37,721 crore post RBI action

PTI, Apr 25, 2024, 12:34 PM IST

New Delhi: Shares of Kotak Mahindra Bank on Thursday tanked 13 per cent after the RBI barred the firm from onboarding new customers through its online and mobile banking channels and issuing fresh credit cards with immediate effect.

The stock plunged 12.10 per cent to its 52-week low of Rs 1,620 on the BSE.

At the NSE, it tumbled 13 per cent to the 52-week low of Rs 1,602.

The company’s market capitalisation (mcap) eroded by Rs 37,720.8 crore to Rs 3,28,662.96 crore.

The stock emerged as the biggest laggard on both the BSE Sensex and NSE Nifty.

Cracking down on repeated non-compliance of IT norms, the RBI on Wednesday barred Kotak Mahindra Bank from onboarding new customers through its online and mobile banking channels and issuing fresh credit cards with immediate effect after the regulator found ‘serious deficiencies’ in the lender’s IT risk management.

These actions, the RBI said, are 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.

Meanwhile, Kotak Mahindra Bank said in a statement that it has taken measures for adoption of new technologies to strengthen its IT systems and will continue to work with RBI to swiftly resolve balance issues at the earliest.

In a statement regarding the supervisory action against Kotak Mahindra Bank, the RBI said: “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.”

Kotak Mahindra Bank has been directed ‘to cease and desist’, with immediate effect, from onboarding of new customers through its online and mobile banking channels and issuing fresh credit cards.

“The bank shall, however, continue to provide services to its existing customers, including its credit card customers,” RBI said.