RBI restricted Kotak Mahindra Bank on April 24, 2024, barring it from onboarding new customers through online and mobile channels and issuing fresh credit cards. It did not stop the bank from serving existing customers. Kotak disclosed that RBI lifted the restrictions on February 12, 2025, so they are no longer in force according to the latest status established here.
What RBI restricted
RBI issued its direction under Section 35A of the Banking Regulation Act, 1949, with immediate effect. The order covered two activities: onboarding new customers through online and mobile banking channels, and issuing fresh credit cards. It did not amount to a shutdown of Kotak’s banking services or a ban on every new account.
| Activity during the restrictions | What the order meant |
|---|---|
| New customer onboarding online or through mobile banking | Not permitted |
| New customer onboarding at a branch | Kotak said branch onboarding could continue |
| Issuing fresh credit cards | Not permitted, including through branches |
| Service for existing customers, including existing credit-card customers | Could continue |
The channel and customer-status distinctions matter: the restrictions targeted online and mobile onboarding, not branch onboarding generally, and fresh card issuance, not servicing existing cardholders.
Why RBI intervened
RBI said its IT examinations of Kotak for 2022 and 2023 found significant concerns that the bank had not addressed comprehensively and on time. The regulator identified deficiencies in several areas of technology risk and operational resilience:
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- IT inventory management
- Patch and change management
- User access management
- Vendor risk management
- Data security and prevention of data leaks
- Business continuity and disaster-recovery practices, including the rigor of drills
RBI also said Kotak’s corrective-action submissions had been inadequate, incorrect or not sustained. It described the bank as materially deficient in building operational resilience in line with its growth.
The concern was not only about internal controls. RBI said frequent and significant outages had affected Kotak’s core banking system and online and digital channels during the preceding two years. The most recent incident it identified was a service disruption on April 15, 2024, which it said caused serious customer inconvenience. RBI stated that the action was intended to protect customers and guard against a possible prolonged outage that could harm customer service and the wider digital banking and payments ecosystem. RBI press release, April 24, 2024
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How existing and prospective customers were affected
Existing customers, including credit-card customers, could continue receiving service. A person seeking to become a customer could still be onboarded at a Kotak branch, according to the bank’s April 24, 2024 exchange disclosure. However, a branch could not issue a new credit card while the restriction applied. Kotak’s April 24, 2024 disclosure
In practical terms, the restriction limited particular ways of acquiring new customers and a particular product activity; it did not require existing customers to stop using their accounts or cards.
When the restrictions ended
RBI said it would review the restrictions after Kotak commissioned a comprehensive external audit with RBI’s prior approval and satisfactorily remedied deficiencies identified in that audit and in RBI inspections. On February 12, 2025, Kotak told the stock exchanges that RBI had communicated its decision that day to lift the restrictions. The bank said RBI was satisfied with the remedial measures and compliance submissions, including the external auditor’s report. Kotak’s February 12, 2025 disclosure
That lifting date and explanation are established by Kotak’s exchange filing. The available account does not provide a separate RBI statement announcing the lifting.
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