The Reserve Bank of India (RBI) on Wednesday removed restrictions against Kotak Mahindra Bank that had barred it from onboarding customers through online and mobile banking channels, and issuing fresh credit cards.

These business curbs were imposed by the central bank on April 24 last year.

“Subsequently, the bank initiated remedial measures to address the supervisory concerns and submitted compliances to the Reserve Bank,” the RBI said in a statement.

“The bank also commissioned an external audit, with prior approval of the RBI, to validate the compliances.”

“Now, having satisfied itself based on the submissions, and remedial measures undertaken by the bank, the RBI has decided to lift the afore-mentioned restrictions placed on Kotak Mahindra Bank. A detailed communication has been issued to the bank,” the RBI added.

“We welcome the RBI’s decision to lift the business restrictions on Kotak Mahindra Bank. We will continue to work closely with the RBI to shortly resume digital onboarding of customers and issuing fresh credit cards,’’ a spokesperson of the bank said.

While this will come as a big relief to the private sector lender, it is also the second major action taken under new RBI governor Sanjay Malhotra.

Last week, Malhotra had announced that the implementation of the liquidity coverage ratio (LCR) rules will be deferred by at least one year and be done in a phased manner.

Shares of Kotak Mahindra Bank on Wednesday ended 1.35 per cent higher at ₹1,943.30 on the BSE.

Speaking to analysts after the lender declared numbers for the third quarter ended December 31, Ashok Vaswani, managing director and CEO, said since the restrictions were placed by the RBI, Kotak Mahindra Bank has “been working very closely with the regulator and have made notable progress on core banking resilience, business continuity, cybersecurity and digital payments framework’’.

He indicated that the bank had seen a slowdown in credit card income because of the embargo placed by the RBI.

“So definitely the embargo hurt, and I am hoping we get out of the embargo soon so that we can get back to our ways. Once we get back to it, we are going to come out much stronger,” he said while replying to a query.

The RBI had in April 2024 said that it is taking the action as the bank did not address the concerns expressed by the regulator on its IT systems.

The RBI added that its IT risk and information security governance was found to be inadequate.