Hiring Alert: After RBI Ban On Onboarding New Customers, Kotak Bank Plans To Recruit 400 Engineers In 2024

If you're an engineer in technology systems, then good news has arrived as the Uday Kotak-backed private lender, Kotak Mahindra Bank is planning the recruitment of 400 such professionals in 2024. With this hiring, Kotak plans to update its technology systems after RBI banned the onboarding of new customers via online and mobile banking.

Notably, Kotak has already roped in over 500 engineers over the past two years. The development was revealed by Milind Nagnur, the bank's chief technology officer in an interview. He said Kotak has hired these engineers from tech biggies like Google, Amazon.com, Paytm, and PhonePe Pvt.

At a recent press briefing, Kotak's Chief Executive Officer Ashok Vaswani said that with the hires this year, the bank will have achieved a "critical mass" in talent and additions would be gradual after that, he said. India's fourth largest private lender boosted spending on technology by more than 30% to 17 billion rupees ($204 million) in the year ended March 31, making up about 10% of operating expenses, as reported by Bloomberg.

As per the report, Vaswani stated that Kotak Bank will double up, and put far more effort, resources and money into overcoming the ban imposed by RBI last month as soon as possible.

After its Q4 results, Kotak Bank said on May 4th, "We are committed to working with all our regulators to achieve the required technology standards," adding, "Bank will step up investments to fortify its IT systems."

Kotak said the focus is on - Accelerate execution of the comprehensive plan for core banking resilience; Demonstrating sustainable compliance to Baseline Cyber Security Framework for Banks; and Continuing to strengthen digital payment security controls.

Last month, RBI banned Kotak from onboarding new customers via its online and mobile banking channels. This has come into effect immediately, April 24, 2024. Although, RBI has allowed Kotak Bank to continue in providing services to its existing customers, including its credit card customers.

Some of the incidents highlighted by RBI that led up to the ban are:

- For two consecutive years, the bank was assessed to be deficient in its IT Risk and Information Security Governance, contrary to requirements under Regulatory guidelines. During the subsequent assessments, the bank was found to be significantly non-compliant with the Corrective Action Plans issued by the Reserve Bank for the years 2022 and 2023, as the compliances submitted by the bank were found to be either inadequate, incorrect or not sustained.

- In the absence of a robust IT infrastructure and IT Risk Management framework, the 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.

- RBI also observed that there has been rapid growth in the volume of the bank's digital transactions, including transactions about credit cards, which is building further load on the IT systems.

On these findings, RBI has been in continuous high-level engagement with the bank on all these concerns to strengthen its IT resilience for the past two years. However, RBI said, "The outcomes have been far from satisfactory."

Hence, RBI has decided to place certain business restrictions on the bank as

in the interest of customers and to prevent any possible prolonged outage which may seriously impact not only the bank's ability to render efficient customer service but also the financial ecosystem of digital banking and payment systems.

In FY24, Kotak's PAT increased to Rs 13,782 crore from Rs 10,939 crore in FY23, up 26% YoY. PAT for Q4FY24 stood at Rs 4,133 crore, up 18% YoY from Rs 3,496 crore in Q4FY23 (up 38% QoQ from Rs 3,005 crore in Q3FY24).

Meanwhile, Net Interest Income (NII) for FY24 increased to Rs 25,993 crore, from Rs 21,552 crore in FY23, up 21% YoY and for Q4FY24 increased to Rs 6,909 crore, from Rs 6,103 crore in Q4FY23, up 13% YoY (up 5% QoQ from Rs 6,554 crore in Q3FY24). Net Interest Margin (NIM) was 5.28% for Q4FY24.

As of March 31, 2024, the customer base of the bank stood at 5 crore, higher from 4.1 crore as of March 31, 2023.