Barring regulated entities from doing business due to irregularities is in the interest of the public. This policy of the central bank will continue but will only be used as a measure of last resort, governor Sanjay Malhotra said.
He said that there are about two banks where the RBI has current “cease and desist” measures. These measures are taken after great consideration and thought after giving opportunity to these entities.
“These are measures of last resort. We will not like to use them too often. These are to be used in the rarest of the rare circumstances where and when all other measures have failed. They are again in the interest of the public and we will keep this policy going forward as well,” Malhotra said.
Kotak Mahindra Bank has been barred by RBI since April 24 from onboarding new customers on its online and mobile banking channels, and issuing fresh credit cards due to deficiencies in its IT systems and controls.
In March, South Indian Bank and Federal Bank suspended on-boarding new customers for its co-branded credit cards until they comply with all of the central bank’s regulatory requirements.
