Kotak Mahindra Bank’s share price experienced a significant drop of nearly 10% following the Reserve Bank of India’s (RBI) directive. The RBI imposed restrictions on the bank, preventing it from issuing new credit cards and onboarding new customers via online channels. This action came as a response to identified deficiencies and non-compliances in several areas of the bank’s IT system for the years 2022 and 2023. Specifically, the RBI barred Kotak Mahindra Bank from adding new customers through its online portal and mobile app and from issuing new credit cards due to significant shortcomings in its IT infrastructure.
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RBI directive, restrictions imposed on Kotak Mahindra Bank
As per its statement, the central bank identified deficiencies and non-compliances in various aspects of the bank’s IT system for the years 2022 and 2023. These included issues related to IT inventory management, patch and change management, user access management, vendor risk management, and data security.
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Analyst perspectives on the impact of RBI’s order on Mahindra bank
Citi warned that the RBI’s action could have negative effects on the bank’s growth, net interest margin (NIM), and fee income. The brokerage issued a ‘neutral’ rating on the stock, setting a target price of ₹2,040 per share. Emkay Global also noted that the restrictions would hinder business growth, stating, “This will result in earnings being affected in the medium term. Furthermore, the regulatory uncertainty will postpone any possibility of a re-rating following the recent management change.”
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