Top / Fri, 26 Apr 2024 The Times of India

RBI restrictions on Kotak Mahindra Bank: What it means for customer, banking and credit card services - FAQs answered

Can you still use services on your Kotak Mahindra Bank savings or current account after RBI's ban? Will Kotak Mahindra Bank credit card customers be affected? RBI action against Kotak Mahindra Bank : The Reserve Bank of India (RBI) recently imposed restrictions on Kotak Mahindra Bank , preventing the bank from onboarding new customers through its online and mobile banking channels and from issuing new credit cards . They can still use Kotak Mahindra Bank's Internet banking and mobile app to access their accounts.RBI's measure doesn't affect Kotak Mahindra Bank's existing accounts. So, if you want, you can go to a Kotak Mahindra Bank branch and open an account.

Here are all the answers to key questions to understand what these restrictions mean for Kotak customers:

1. Can Kotak 811 customers access their accounts after RBI's action?

ALSO READ |

6. Can current Kotak Mahindra Bank credit card customers renew their cards?

7. Can you get a new credit card from Kotak Mahindra Bank?

8. How long will these restrictions last?

RBI action against Kotak Mahindra Bank : The Reserve Bank of India (RBI) recently imposed restrictions on Kotak Mahindra Bank , preventing the bank from onboarding new customers through its online and mobile banking channels and from issuing new credit cards . This has raised questions among existing and potential customers about the impact of this decision on their accounts and services.What happens to Kotak Mahindra Bank customers now that the Reserve Bank of India (RBI) has barred the bank from adding new customers via online/mobile banking and from issuing new credit cards? Should Kotak 811 account holders worry? Can existing customers still renew their credit cards? What does RBI's decision mean for those wanting to open accounts at Kotak Mahindra Bank?According to ET, Kotak 811 customers, who opened their accounts digitally, won't be affected by the regulator's latest decision. They can still use Kotak Mahindra Bank's Internet banking and mobile app to access their accounts.RBI's measure doesn't affect Kotak Mahindra Bank's existing accounts. The bank stated, “We want to reassure our existing customers of uninterrupted services, including credit card, mobile and Net banking.”Since Kotak 811 is a digital savings account, new customers can't open it after RBI's restriction. Shivaji Thapliyal, Head of Research and Lead Analyst at YES Securities, explained that the RBI ban prevents Kotak Mahindra Bank from adding new customers through online channels. This means that new customers cannot buy any banking product online until the ban is lifted.The private sector bank can still add new customers through offline channels like bank branches. So, if you want, you can go to a Kotak Mahindra Bank branch and open an account. The bank also stated that their branches still welcome new customers and provide all services, except for issuing new credit cards.Kinjal Champaneria, Partner at Solomon & Co., explains that the current restrictions on Kotak Mahindra Bank shouldn't affect existing customers, including those with credit cards, except for potential issues in accessing online banking due to lapses in the bank's IT infrastructure . RBI imposed strict measures on Kotak because of unaddressed supervisory concerns found in the regulator's IT examination for the fiscal years 2022-2023, and because of frequent tech outages, the latest being on April 15, 2024.Champaneria noted that while Kotak Mahindra Bank can't issue new credit cards, it will continue to serve existing customers, including credit card renewals. This means Kotak Mahindra Bank customers can renew their credit cards without any issues.Since the RBI has banned Kotak Mahindra Bank from issuing new credit cards, you can't get a new credit card from them.In its April 24, 2024 press release, RBI stated that the restrictions will be reviewed after a comprehensive external audit commissioned by the bank with RBI's prior approval, along with correcting any deficiencies found in the audit and addressing the observations from RBI inspections, to RBI's satisfaction.A research report by Emkay indicates that the restrictions will be reviewed after the external audit and corrective action plan meet RBI's approval, which usually takes six to 12 months.Champaneria mentions that HDFC Bank Limited faced similar restrictions in 2020, requiring them to upgrade their IT systems. These restrictions were lifted in 2022 after the RBI was satisfied with the corrective steps HDFC took.