Kotak Mahindra Bank’s Stock Takes a Hit (Image Source: iStockphoto, Twitter)
On Thursday, the shares of Kotak Bank cracked by over 9 per cent and at the time of filing, the shares were trading at Rs 1,661.90. The sharp fall in shares came after the Reserve Bank of India (RBI) has taken strict action against Kotak Mahindra Bank, directing it to halt the onboarding of new customers via online and mobile channels, and to cease issuing fresh credit cards.
This move comes in response to grave concerns raised by the RBI’s IT examination of the bank for the years 2022 and 2023, highlighting significant deficiencies in various critical areas such as IT inventory management, data security, and vendor risk management.
The serious lapses were identified in the bank’s IT infrastructure, including shortcomings in patch and change management, user access control, and data leak prevention strategies. Despite repeated directives and corrective action plans issued by the RBI, the bank failed to address these concerns adequately and in a timely manner.
These regulatory measures have been implemented to safeguard the interests of customers and prevent potential disruptions that could adversely affect the bank’s service delivery and the overall digital banking ecosystem.
Kotak Bank Share Price Target
Jefferies downgraded Kotak Mahindra Bank’s target price to Rs 1970 from Rs 2050 while maintaining a hold rating.
According to the Jefferies report, this scrutiny draws parallels to HDFC Bank’s similar ordeal in 2020, which took several months to resolve. If Kotak faces a prolonged resolution period exceeding six months, it could impact revenues and costs. Despite these challenges, Kotak’s credit card segment has shown remarkable growth, with a 20 per cent year-on-year increase in customers and a 50 per cent surge in value.
The 52 week high and low of the Kotak Bank share is Rs 2,064.40 and Rs 1,602 respectively. According to the BSE analytics, the shares have given negative returns of 6.53 per cent in the last 1 month and 12.16 per cent in the last 1 year.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. TT Research DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
