In March this year, the RBI asked Federal Bank and South Indian Bank to stop issuing new co-branded credit cards, in an effort to improve regulatory scrutiny.
Image: Punit Paranjpe / AFP
The Reserve Bank of India’s (RBI) regulatory action against one of the largest private lenders, Kotak Mahindra Bank (KMB), on Wednesday will have repercussions for the bank—now under the new CEO Ashok Vaswani—raising concerns over in its future growth path if the restrictions are not lifted soon. It also raises deeper concerns for all banks in the country, signalling that no one will be spared and that introspection, rather than balance sheet growth, needs to find priority for managements.
The bank will have to cease and desist, with immediate effect, from onboarding new customers through its online and mobile banking channels and issuing fresh credit cards. KMB can, however, service its existing customers, including those for credit cards.