RBI Lifts Restrictions On Kotak Mahindra Bank, Allows New Digital Account Opening

The Reserve Bank of India (RBI) on February 12, 2025, announced that it has lifted the restrictions put on Kotak Mahindra Bank. Kotak Mahindra customers can now apply for new 811 (digital bank accounts) at Kotak Mahindra Bank through the bank’s online and mobile banking channels, and also apply for new Kotak Mahindra Bank credit cards. 

“The Reserve Bank has decided to lift the aforementioned restrictions placed on Kotak Mahindra Bank,” RBI in a press release dated February 12, 2025.  

This has come as a good news for customers who wish to apply for a new Kotak Mahindra Bank credit card or open an account with the bank through online or mobile banking mediums. 

Why RBI Removed Kotak Mahindra Bank Removed From The Restricted Business List? 

RBI said in its press release: “...the bank initiated remedial measures to address the supervisory concerns and submitted compliances to the Reserve Bank. The bank also commissioned an external audit, with prior approval of RBI, to validate the compliances. Now, having satisfied itself based on the submissions, and remedial measures undertaken by the bank, the Reserve Bank has decided to lift the aforementioned restrictions placed on Kotak Mahindra Bank Limited.” 

In response to RBI’s announcement, Kotak Mahindra Bank said in an exchange filing, “In this regard, we wish to inform you that the RBI, having reviewed the remedial measures undertaken by the Bank to address supervisory concerns, along with the compliance submissions (including the external auditor's report), has communicated its decision to lift the aforementioned restrictions on the Bank.  

This decision was conveyed via letter dated February 12, 2025, at 16:52 IST.” 

Earlier this week, during the post-monetary press briefing, RBI Governor Sanjay Malhotra shared that the central bank’s policy of implementing restrictions on regulated entities was an attempt as a last resort, which is to be used in the rarest of the rare situations when every other method fail. 

Why RBI Placed Restrictions On Kotak Mahindra Bank 

On April 24, 2024, RBI imposed certain business restrictions on Kotak Mahindra Bank. The RBI imposed restrictions after Kotak Mahindra Bank reportedly failed to address gaps in its Information Technology (IT) systems. These restrictions were imposed because the bank’s recurring online outages caused customer inconvenience. 

The restrictions followed right after Ashok Vaswani was appointed as managing director and chief executive officer in January 2024. 

Kotak Mahindra Bank in its Q3FY25 reported a margin of 4.93 per cent compared to 5.02 per cent in Q1FY25 and 5.28 per cent in Q4FY24.