Kotak Mahindra Bank tanks 11% in one day

The crash

Kotak Mahindra Bank, one of the leading players in the private banking space, shed 11 per cent of its value in a single day due to an RBI ban.

The ban

The ban prohibits the bank from issuing fresh credit cards and onboarding new customers through online modes.

Rationale behind the ban

The ban was imposed as RBI found serious deficiencies in the bank’s IT infrastructure in FY22 and FY23.

The path ahead

The bank has stated it is actively working to fortify its IT system and resolve the issue. But, digital banking is one of its biggest segments under its Kotak 811 initiative.(cont)

The path ahead

Hence, the impact of the ban, in the short term, might be significant. However, the bank is allowed to onboard new customers through its branches.

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