Shares of Kotak Mahindra Bank on Monday, April 29, rose 2 per cent to Rs 1,638.75 apiece on the BSE on value-buying, after two days of decline. The private sector lender’s shares saw selling on Thursday and Friday after investors exited the investment following the RBI’s action against the bank on Wednesday.
On April 29, shares of Kotak Mahindra Mahindra closed Rs 31.85 or 1.98 per cent higher at Rs 1,640.25 apiece on the BSE.
In the previous two trading sessions on April 25 and April 26, the bank’s shares saw a combined loss of 12.75 per cent. On April 24, when the RBI’s barred Kotak Mahindra Bank from onboarding new customers online and from issuing credit cards, the lender’s shares stood at Rs 1,843 apiece on the BSE, which declined 12.75 per cent to Rs 1,608 till the April 26 closing.
The Reserve Bank of India (RBI) on Wednesday, April 24, barred Kotak Mahindra Bank from onboarding any new customers online and through mobile banking channels, and issuing new credit cards.
The RBI’s decision stems from significant concerns identified during IT examinations of Kotak Mahindra Bank in 2022 and 2023. The bank’s failure to address these concerns adequately and promptly led to the imposition of restrictions.
The restrictions will be reviewed after a comprehensive external audit and remediation of deficiencies. While no specific timeline is provided, it’s estimated to take between 6 to 12 months. Kotak Mahindra Bank said it is actively working to strengthen its IT systems to resolve the issues promptly.
On Friday, S&P Global Ratings said RBI’s regulatory action on Kotak Mahindra Bank could restrain the lender’s credit growth and profitability. Credit cards are a higher-yielding target growth segment for Kotak Mahindra Bank. This portfolio grew at 52 per cent year-on-year as of December 31, 2023, compared with total loan growth of 19 per cent.
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