RBI embargo: Kotak Mahindra Bank appoints Grant Thornton Bharat as external auditor

Kotak Mahindra Bank Ltd has appointed Grant Thornton Bharat as the external auditor as part of measures to plug gaps in its information technology (IT) systems, months after the banking regulator barred it from onboarding new customers through its website and mobile app.

In April, the Reserve Bank of India (RBI) said it found deficiencies and non-compliances in Kotak Mahindra Bank's IT inventory management, patch and change management, user access management, vendor risk management and data security, among other issues, for 2022 and 2023.

The regulator, which also prohibited the bank from issuing new credit cards, said even as the curbs are in place, Kotak Mahindra Bank will continue to provide services to its existing customers.

Also Read: Kotak Mahindra Bank Q1 Results: Net profit zooms 81% to ₹6,249 crore, NII up 10% YoY

“In consultation with the RBI, we put together a comprehensive plan to fix all outstanding issues,” Chief executive Ashok Vaswani told reporters after announcing the June-quarter results on Saturday.

From a technology perspective, he said, the bank has made significant progress during the first quarter of 2024-25. According to Vaswani, the bank has beefed up the internal team with “resources from Accenture, Infosys, Oracle and Cisco and focused on relentless execution”.

“I feel very comfortable and good as to where we are today,” said Vaswani, adding that the bank is in constant communication with the regulator.

He said that although the embargo has had a “muted impact” on growth in credit cards, personal loan business and on new acquisitions on digital banking platform Kotak 811, the 811 team has done a “fantastic job in deepening relationships with its customers”.

Also Read: Kotak must act fast to escape RBI’s cyber-risk clamps

The April statement said RBI would review the restrictions after the bank commissioned a comprehensive external audit with RBI's prior approval and addressed all deficiencies that may be pointed out in the audit and observations from RBI inspections to the satisfaction of the central bank.

After the restrictions on digital customer acquisition, the bank recently announced a new distribution structure. In a statement on 16 July, Kotak Mahindra Bank said the new structure integrates the “physical branch network, digital branch channel (encompassing mobile banking and net banking platforms) and the voice channel”.

It also appointed former ICICI Bank executive Pranav Mishra as the head of distribution.

Also Read: Kotak Bank's rollercoaster: From setbacks to a surging Q4

The bank is also looking to add more branches. Reuters reported in June that the bank will add about 175-200 branches in the current fiscal year. As of 30 June, the bank had 1,965 branches, excluding those in Dubai International Financial Centre and the GIFT City in Gujarat.