Kotak Mahindra Bank Shares Plummet 10% On RBI Ban
The RBI invoked its authority under Section 35A of the Banking Regulation Act, 1949
Kotak Mahindra Bank shares experienced a sharp decline of 9.7 per cent following the RBI's ban on new client acquisitions and fresh debit card issuances via online channels. This decision, driven by the RBI's significant concerns arising from its IT examination of the bank for 2022 & 2023, underscores the bank's failure to address operational resilience issues. The RBI invoked its authority under Section 35A of the Banking Regulation Act, 1949.
Macquarie Capital analyst Suresh Ganapathy highlighted the negative impact on Kotak's growth trajectory, particularly given its heavy reliance on digital operations. Approximately 95 per cent of the bank's new personal loans and 99 per cent of new credit cards were disbursed digitally in Q3FY24, emphasizing the substantial digital footprint affected by the ban.
Similar regulatory actions have been taken against other banks in the past, such as HDFC Bank in December 2020, resulting in limitations on recruiting new credit card customers and launching digital products after a power failure disrupted its digital payment services.
The development has also influenced the Nifty Bank index, which saw a decline of 0.86 per cent, albeit offset by Axis Bank's positive performance following better-than-expected Q4 results. Axis Bank shares are trading 4.21 per cent higher at 1,108.00 apiece, balancing some of the pressure on the index.
