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?
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?
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.
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2. Can you still use services on your Kotak Mahindra Bank savings or current account after RBI’s ban?
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.”
3. Is it possible to open a Kotak 811 digital savings account now?
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.
4. Can you open a savings account at a Kotak Mahindra Bank branch?
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.
5. Will Kotak Mahindra Bank credit card customers be affected?
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.
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6. Can current Kotak Mahindra Bank credit card customers renew their cards?
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.
7. Can you get a new credit card from Kotak Mahindra Bank?
Since the RBI has banned Kotak Mahindra Bank from issuing new credit cards, you can’t get a new credit card from them.
8. How long will these restrictions last?
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.
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