Kotak Bank promoter donated electoral bonds worth Rs 60 cr, but RBI cracks down on lender to protect customers

NEW DELHI:

Infina Finance, one of the promoter group entities of Kotak Mahindra Bank which was barred by the RBI on Wednesday from onboarding new customers, had donated electoral bonds worth Rs 60 crore to the BJP.

Infina Finance, owned by the Kotak family, is listed as one of the promoter group entities of Kotak Mahindra Bank which has now been stopped by the RBI, with immediate effect, from taking on new customers and issuing fresh credit cards.

The RBI order issued on Wednesday said business restrictions on Kotak Mahindra Bank have been imposed in the interest of the customers as the Uday Kotak-controlled bank was assessed to be deficient in its IT Risk and Information Security Governance.

BSE data shows that, as of March 2024, the promoter and promoter group entities hold a 25.89 per cent stake in Kotak Mahindra Bank.

Uday Kotak is the promoter and single-largest shareholder of Kotak Mahindra Bank, with a 25.71 per cent stake. The remaining 0.18 per cent stake is held by other promoter group entities.

Infina Finance donated electoral bonds worth Rs 60 crore to the BJP which were purchased in the denomination of Rs 1 crore in 2019, 2020 and 2021, according to data submitted by the State Bank of India (SBI) to the Election Commission.

The RBI order states: “In the absence of a robust IT infrastructure and IT Risk Management framework, the Kotak Mahindra Bank’s Core Banking System (CBS) and its online and digital banking channels have suffered frequent and significant outages in the last two years, the recent one being a service disruption on April 15, 2024, resulting in serious customer inconveniences. The bank is found to be materially deficient in building necessary operational resilience on account of its failure to build IT systems and controls commensurate with its growth.”

 


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