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Equity benchmark indices Sensex and Nifty ended lower on July 22, dragged down by heavy selling pressure in Reliance Industries and Kotak Mahindra Bank ahead of the Budget.

Besides, a weak trend in global equity markets also hit investors sentiment, traders said.

Falling for the second day in a row, the 30-share BSE Sensex fell 102.57 points or 0.13% to settle at 80,502.08. During the session, it tanked 504 points or 0.62% to 80,100.65.

The NSE Nifty dipped 21.65 points or 0.09% to 24,509.25. During the day, it dropped 168.6 points or 0.68% to 24,362.30.

Reliance Industries declined over 3% among the Sensex pack after the company reported a 5% drop in its June quarter net profit.

Kotak Mahindra Bank also fell more than 3% after its June quarter earnings failed to cheer investors.

ITC, State Bank of India, HCL Technologies and IndusInd Bank were the other big laggards.

NTPC, UltraTech Cement, HDFC Bank and Mahindra & Mahindra were among the gainers.

HDFC Bank climbed over 2% after the company’s consolidated net profit grew 33.17% to ₹16,474.85 crore in the June 2024 quarter.

In Asian markets, Seoul, Tokyo and Shanghai settled lower, while Hong Kong ended in the positive territory.

European markets were trading higher in the mid-session deals. U.S. markets ended lower in overnight trade on July 19

According to the Economic Survey, 2023-24 tabled in Parliament on July 22, capital markets are becoming more prominent in India’s growth story, with an expanding share in capital formation and investment landscape on the back of technology, innovation and digitisation.

Further, Indian markets are resilient to global geo-political and economic shocks, it added.

“Despite heightened geo-political risks, rising interest rates and volatile commodity prices, Indian capital markets have been one of the best performing among emerging markets in FY24,” the Economic Survey said.

Meanwhile, global oil benchmark Brent crude dipped 0.08 per cent to $82.53 a barrel.

Foreign Institutional Investors (FIIs) bought equities worth ₹1,506.12 crore on July 19, according to exchange data.

The BSE benchmark hit its new all-time high of 81,587.76 in the initial trade on July 19 but failed to carry forward the winning momentum and tanked 738.81 points or 0.9% to settle below the 81,000 mark at 80,604.65.

Nifty tumbled 269.95 points or 1.09% and ended at 24,530.90 after hitting its fresh record peak of 24,854.80 during the opening bell on July 19.

Share brokers watching stock prices at BSE Sensex and NSE Nifty at Calcutta Stock Exchange in Kolkata. File
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Equity benchmark indices rebounded in early trade on Monday following a rally in the U.S. markets and heavy buying in Kotak Mahindra Bank.

The 30-share BSE Sensex climbed 328.54 points to 74,206.69 in early trade. The NSE Nifty advanced 93.45 points to 22,569.30.

From the Sensex basket, Kotak Mahindra Bank jumped over 4% after the company reported a 25% growth in its March quarter net profit at ₹5,302 crore, limited by a drop in the core income due to narrow interest margins.

Tata Consultancy Services, JSW Steel, IndusInd Bank, ICICI Bank, Wipro and Axis Bank were among the other major gainers.

Titan, State Bank of India, Power Grid and Larsen & Toubro were the laggards.

In Asian markets, Shanghai and Hong Kong were trading in the positive territory.

Wall Street ended with significant gains on Friday.

Billionaire investor Warren Buffett said that the Indian market has “unexplored” opportunities which his conglomerate holding company, Berkshire Hathaway, would like to explore “in the future”.

Mr. Buffett’s remarks came at Berkshire’s annual meeting on Friday when Rajeev Agarwal of DoorDarshi Advisors, a U.S.-based hedge fund that invests in Indian equities, asked him about the possibility of Berkshire exploring in India, the world’s fifth-largest economy.

“Positive comment by Warren Buffett that India is an untapped market with great potential is hugely important. FIIs can take a cue from that rather than react every time to changes in U.S .bond yields,” said V.K. Vijayakumar, chief investment strategist, Geojit Financial Services.

The U.S. jobs data for April has come lower-than-expected indicating a weakening labour market and slowing economy, Mr. Vijayakumar said.

“U.S. unemployment has risen to 3.9% in April. So the possibility of a rate cut by the Fed has again brightened. The decline in the dollar index to 105.8 and the cut in the 10-year U.S. bond yield to 4.49% augur well for the market,” he added.

Global oil benchmark Brent crude climbed 0.23% to $83.15 a barrel.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹2,391.98 crore on Friday, according to exchange data.

The BSE benchmark dropped 732.96 points or 0.98% to settle at 73,878.15 on Friday. The NSE Nifty also declined 172.35 points or 0.76% to 22,475.85.

Uday Kotak built his Kotak Mahindra Bank Ltd. over decades to become Asia’s richest banker. After India’s regulator slapped his bank with a surprise ban, he’s facing one of his biggest tests yet – and a dip in wealth.

The lender’s shares tumbled as much as 13% on Thursday after it was barred from adding new customers through its digital channels and from issuing fresh credit cards. As the largest shareholder with a stake of almost 26%, the billionaire founder bore the heaviest brunt from the selldown, the most in four years. 

That saw his wealth decline by $1.3 billion, according to the Bloomberg Billionaires Index. He was worth $14.4 billion as of April 24.

Rival Axis Bank Ltd. overtook Kotak’s market capitalization for the first time since Sept. 2016. Axis’ shares had surged after its earnings beat analysts’ estimates. 

The Reserve Bank of India cited governance and risk issues about Kotak’s technology systems as reasons behind its ban. It found deficiencies and non-compliance in various processes over two years – from a lack of data security and leak prevention strategies to vendor risk management  – according to a statement late Wednesday. 

Kotak said in response that it has taken measures for “adoption of new technologies to strengthen its IT systems and will continue to work with RBI to swiftly resolve balance issues at the earliest.”

It’s not Kotak’s first run-in with the regulator. The billionaire previously took India’s central bank to court over the size of his stake in the lender. Kotak ultimately agreed to reduce his ownership in 2020, ending the feud.

New CEO

It was only at the start of this year that Kotak handed the reins over to new Chief Executive Officer Ashok Vaswani. Vaswani has said scale will be critical for the bank’s growth, and that the lender has been investing in technology.

Kotak, a native of the western state of Gujarat, set up an investment company in 1985 with a 3 million rupee loan ($41,000) from family and friends and partnered with Mahindra the following year.

The financier was Kotak Mahindra Bank’s CEO since its beginning and gained more control of it in 2006 by ending a partnership of more than a decade with Goldman Sachs Group Inc. 

Almost 98% of the transaction volume in Kotak’s savings accounts were by digital or non-branch methods, according to its most recent investor presentation for the quarter ended Dec. 31.

“The ban on online customer acquisition will have an impact on Kotak Mahindra Bank’s growth as it is one of the slowest lenders for physical branch expansions,” said Ashutosh Mishra, banking analyst at Ashika. “The RBI ruling will create a negative sentiment on the bank.”

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

New Delhi:

Infina Finance, one of the promoter group entities of Kotak Mahindra Bank – currently facing RBI action, 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. However, it owns no shares in the private sector lender, which the RBI has barred from issuing fresh credit cards.

As per the shareholding data with the BSE, 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. Other promoter group entities hold the remaining 0.18 per cent stake.

The Mumbai-based Infina Finance donated electoral bonds worth Rs 60 crore to the Bharatiya Janata Party (BJP). The NBFC firm purchased these bonds in the denomination of Rs 1 crore in 2019, 2020 and 2021, according to the data given by the State Bank of India (SBI) to the Election Commission. The data was made public last month.

Infina Finance Private Ltd, according to its website, was incorporated in 2008 and is in the business of capital market financing and proprietary trading and investments.

Infina, a non-deposit accepting, systemically important non-banking financial company registered with the RBI, had reported a profit of Rs 105.55 crore in 2022-23. The firm posted a total income of Rs 227.84 crore during the fiscal.

On Wednesday, the Reserve Bank of India (RBI) barred Kotak Mahindra Bank from onboarding new customers through its online and mobile banking channels and issuing fresh credit cards with immediate effect after the regulator found “serious deficiencies” in the lender’s IT risk management.

These actions, the RBI said, are necessitated based on significant concerns arising out of the Reserve Bank’s IT examination of the bank for the years 2022 and 2023, and its continued failure to address these concerns in a comprehensive and timely manner. 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

New Delhi:

Hours after the Reserve Bank of India prohibited Kotak Mahindra Bank from onboarding new customers online and issuing fresh credit cards, citing issues with the company’s data security and information technology infrastructure, the bank has said it is adopting new technologies and strengthening its IT systems.

It also assured existing customers that services will continue without any disruptions and said new customers can be onboarded at its branches. 

READ | RBI Curbs On Kotak Mahindra Bank: No New Online Customers, Credit Cards

“We have received an order from the RBI which directs us to temporarily pause onboarding of new customers though our online and mobile banking channels and issuance of fresh credit cards. The Bank has taken measures for adoption of new technologies to strengthen its IT systems and will continue to work with RBI to swiftly resolve balance issues at the earliest,” Kotak Mahindra Bank said in a statement. 

“We want to reassure our existing customers of uninterrupted services, including credit card, mobile and net banking. Our branches continue to welcome and onboard new customers, providing them with all the Bank’s services, apart from issuance of new credit cards,” it added. 

READ | Should Existing Kotak Mahindra Bank Customers Be Worried Over RBI Curbs?

In a release earlier on Wednesday, RBI had said “significant concerns” had come to the fore in its IT examination of Kotak Mahindra Bank last year and in 2022, and that the bank had failed to address the concerns in a “comprehensive and timely manner”.

“Serious deficiencies and non-compliances were observed in the areas of IT inventory management, patch and change management, user access management, vendor risk management, data security and data leak prevention strategy, business continuity and disaster recovery rigour and drill, etc. 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,” the central bank said.

New Delhi:

Citing data security concerns and deficient IT infrastructure, the Reserve Bank of India has barred Kotak Mahindra Bank from onboarding new customers online and issuing new credit cards with immediate effect. The bank can, however, continue to serve its current customers, including those holding credit cards.

“The Reserve Bank of India has today, in exercise of its powers under Section 35A of the Banking Regulation Act, 1949, directed Kotak Mahindra Bank Limited (hereinafter referred to as ‘the bank’) to cease and desist, with immediate effect, from (1) onboarding of new customers through its online and mobile banking channels and (II) issuing fresh credit cards. The bank shall, however, continue to provide services to its existing customers, including its credit card customers,” the central bank said in a release.

The RBI said the actions are based on “significant concerns arising out of Reserve Bank’s IT Examination of the bank for the years 2022 and 2023 and the continued failure on part of the bank to address these concerns in a comprehensive and timely manner”.

It said there were “serious deficiencies” in the way Kotak Mahindra Bank manages its IT inventory and secures its data. “Serious deficiencies and non-compliances were observed in the areas of IT inventory management, patch and change management, user access management, vendor risk management, data security and data leak prevention strategy, business continuity and disaster recovery rigour and drill, etc. 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,” the RBI said.

“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,” it added.

The RBI noted that due to the absence of a robust IT infrastructure, the bank’s digital banking channels have suffered frequent outages and inconvenienced customers.

“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,” it said.

“In the past two years, the Reserve Bank has been in continuous high-level engagement with the bank on all these concerns with a view to strengthening its IT resilience, but the outcomes have been far from satisfactory. It is also observed that, of late, there has been rapid growth in the volume of the bank’s digital transactions, including transactions pertaining to credit cards, which is building further load on the IT systems,” the RBI said.

The central bank has said it has decided to place some curbs on the bank in the interest of the customers. “The Reserve Bank, therefore, has decided to place certain business restrictions on the bank as mentioned above, 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,” the RBI said.

The curbs, the central bank said, will be review after an audit and corrective steps. “The restrictions now being imposed will be reviewed upon completion of a comprehensive external audit to be commissioned by the bank with the prior approval of RBI, and remediation of all deficiencies that may be pointed out in the external audit as well as the observations contained in the RBI Inspections, to the satisfaction of the Reserve Bank. Further, these restrictions are without prejudice to any other regulatory, supervisory or enforcement action that may be initiated against the bank by the Reserve Bank,” the RBI said.

About Kotak Mahindra Bank

Kotak Mahindra’s journey started in 1985 when Uday Kotak founded Kotak Capital Management Finance as an investment and financial services company. The next year, Anand Mahindra and his father Harish Mahindra invested in the company, and it was renamed Kotak Mahindra Finance.

In 2003, Kotak Mahindra Finance Ltd. received banking licence from the RBI and became the first non-banking finance company in India to convert into a bank. The bank currently offers services ranging from commercial banking to stock broking to mutual funds to insurance and investment banking.

As on December 31 last year, the bank has 4.8 crore customers, 1,869 branches and 3,239 ATMs.

New Delhi:

Kotak Mahindra Bank has received approval from the Reserve Bank of India (RBI) for the appointment of Ashok Vaswani as the bank’s Managing Director and Chief Executive Officer.

Here are a few facts about Ashok Vaswani:

1. Ashok Vaswani is presently the president of the US-Israel fintech firm Pagaya Technologies.

2. An alumnus of Sydenham College of Commerce and Economics, Ashok Vaswani has had a long career with global banks including Citigroup and Barclays.

3. Mr Vaswani held the position of Consumer Banking CEO in Citibank’s Asia Pacific division from 2004 to 2007. After the global financial crisis, he took on the role of Chief of Cards at Barclays in Europe and later in Africa.

4. In 2012, Ashok Vaswani became the CEO of Barclays’ Retail Banking division in London and eventually rose to be the CEO for all of Barclays UK, where he oversaw various financial sectors.

5. From 2021 until he retired in July 2022, Mr Vaswani served as the Chief Digital Officer of the British bank. Following his retirement, he became the President of Pagaya.

Bengaluru:

The Reserve Bank of India (RBI) on Tuesday said that it has imposed a penalty of Rs 12 crore 19 lakh on ICICI Bank for violating rules related to the code of conduct for the bank’s directors and for fraud reporting.

The RBI’s inspection reports showed ICICI Bank had sanctioned or committed loans to companies in which two of its directors were also directors, the RBI said in a release.

The bank had also marketed and engaged in the sale of non-financial product and failed to report frauds to the central bank within the prescribed timeline of within three weeks from detection.

The violations were detected during inspections for the financial years ending March 2020 and March 2021, the RBI said.

The central bank separately penalised fellow private lender Kotak Mahindra Bank with a sum of Rs 3.95 crore.

The bank was found to have levied interest on some loans contrary to terms of sanction, failed to carry out an annual review of a service provider and ensure that its customers are not contacted between 7 pm and 7 am as directed by the RBI, inspections showed.

These violations were caught during an inspection for the financial year ending March 2022.

New Delhi:

Banker Uday Kotak has resigned as CEO and Managing Director of Kotak Mahindra Bank.

In a letter to Prakash Apte, Chairman of the Board of Directors, Mr Kotak said he has resigned “with immediate effect” though he still has a few months to go.

“I have mulled over this decision for some time and believe this is the right thing to do,” Mr Kotak said in the letter.

“Succession at Kotak Mahindra Bank has been foremost on my mind, since our Chairman, myself and Joint MD are all required to step down by year-end. I am keen to ensure smooth transition by sequencing these departures. I initiate this process now and step down voluntarily as CEO,” he said.

Meantime, the current joint MD Dipak Gupta will function as MD and CEO, subject to approvals.

“As founder, I am deeply attached to brand Kotak and will continue to serve the institution as non-executive director and significant shareholder. We have an outstanding management team to carry the legacy forward. Founders go away, but the institution flourishes into perpetuity,” Mr Kotak said.

My letter is attached pic.twitter.com/vcSIEcvy2r

— Uday Kotak (@udaykotak) September 2, 2023

Mr Kotak has led the group in a broad range of financial services for 38 years. He has said he believes the true measure of performance is sustainable value creation.

The group’s vision for equitable prosperity also extends beyond financial services. The group via Kotak Education Foundation works with some of India’s most economically underprivileged communities, attempting to alleviate poverty through education and livelihood programmes.