What was the incident?
For the past three days, the share price of Kotak Mahindra Bank were falling. RBI examined the bank's IT infrastructure in 2022 and 2023. Then the Regulator issued corrective action plan for those two years. But the bank failed to address these concerns in a comprehensive and timely manner. Even the incident on April 15th added fuel to fire.
So based on these, on 24th April in a press release, the Regulator [RBI] has cited deficiency in areas of IT infrastructure, vendor risk management, data security, data leak prevention strategy and business continuity plan. But the bank did not comply with corrective action plan issued by RBI in the previous year.
Further the Regulator also mentioned that, in the absence of robust IT infrastructure and IT risk management framework, the bank's core banking system and digital banking channels have suffered frequent and significant outrages in the past two years.
What happened on April 15th?:
On 15th April, many customers were unable to use the bank's mobile app and they took the issue to social media. This was noticed by the Regulator and even in their press release the RBI mentioned about the issue faced by bank's customers on April 15th.
Then the Regulator barred the bank from admitting new customers through online and mobile modes and also stopped the bank from issuing credit cards.
Statement of company:
From the company side they said that, they are trying to resolve the issues cited by the Regulator. People can however create new bank accounts by physically visiting the branch.
Opinion of analysts and investment banks :
Analysts are of view that, since the bank have only limited branch network in comparison with its private peers, it might be difficult for it to add new customers. According latest data of new savings account in financial year 2023, 72% of savings account were opened by online mode. So, sudden ban for opening an account through online mode can impact the company badly.
When it comes to investment, as of now we cannot tell anything. Many investment banks have reduced the target price for the bank's shares. Also the bank's deposit growth has declined year-on-year according to news reports. They have reduced their NPA.
So we cannot expect anything about the stock appreciation based on fundamentals alone. We must also remember that even a ban like this was imposed on HDFC also.
So in my opinion we should wait and watch what's going to happen next. As of now we cannot invest in this.
Disclaimer:
I request readers to not to consider this as a buy or sell advise. It is purely for information purposes only. Do consult a SEBI registered advisor for selecting stocks for investing or selling existing stocks.
Post a Comment