Dalal street has responded to RBI's crucial action on one of the biggest names in the Indian banking industry, Kotak Bank. On Wednesday, the Central Bank of the country proscribed Kotak Mahindra Bank from onboarding new customers through its virtual or online channels.
10 per cent Drop in Shares
This embargo also includes mobile banking channels. In addition, the RBI has also restricted Kotak from issuing new credit cards.
As of result of this development, the markets have passed the heat on to the company, in the equity market as well. This, as shares of major banking entities are trading in green. All this while, the bank at the centre of the controversy is struggling in the early day's trade.
Screengrab of the happenings |
Kotak Bank shares started Thursday's day with a mammoth 10.00 per cent drop in its share prices.
At 1028 IST, ICICI Bank, one of the largest private lenders in the market was trading in green, gaining 1.34 per cent. HDFC Bank shares gained 0.21 per cent. Another private bank, IndusInd Bank shares were trading with a 0.94 per cent gain. Public sector behemoth, State Bank Of India (SBI) also was trading in green, making gains of 1.23 per cent. Axis Bank, another private bank, appears to be the biggest gainer so far, as the value of shares jumped 3.69 per cent. The Indian indices started the day's trade in red.
These actions, according to RBI, emerged on the basis of significant concerns raised in Reserve Bank's IT examination of the bank for the years 2022 and 2023. |
Kotak Bank's Non Compliance
Kotak Bank found itself in this predicament, after RBI found the bank to be non-compliant to regulations. These actions, according to RBI, emerged on the basis of significant concerns raised in Reserve Bank's IT examination of the bank for the years 2022 and 2023. Here, it found the bank to have failed in addressing these concerns in a comprehensive and timely manner.
In a statement 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,".
The bank has not officially commented on the development, nevertheless the social media profiles have been engaging with customer and their grievances.
The bank is expected to put out their quarterly earning results on 4 May. It remains to be seem, as to what comes to pass after that, and whether this volatility is tamed.
