Abhay Aggarwal of Piper Serica explained the significance of the recent move by RBI on Kotak Mahindra Bank.
RBI has said in its report that last year in October 2023, there was an offline fraud of Rs 2700 crore in October, November and December. These frauds happen through banks because banks do not like fraud.
According to the RBI report, offline fraud worth Rs 2700 crore took place through banks in October, November and December 2023. Such fraud incidents are troublesome for banks, as they abhor such practices.
Following the official action by the Reserve Bank of India, Kotak Mahindra Bank is not allowed to offer new credit cards and cannot enroll new customers online. Abhay Aggarwal of Piper Serica considers it a transparent decision of IB. People are understanding it from digital banking side but it has nothing to do with digital banking. Aggarwal said that recently RBI has said in its report that online fraud worth Rs 2700 crore took place in October, November and December last year 2023. These frauds have happened through banks because banks are not able to prevent frauds.
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Many companies require 2 Factor Authentication, but it turns out that using One-Time Password (OTP) is not a secure method.
In fact, according to Agarwal, OTP is considered the least reliable system for 2 factor authentication Agarwal says scammers obtain OTPs by luring individuals, leaving affected people vulnerable when banks can offer little assistance.
The elderly are statistically targeted more often. Two-factor authentication only serves as OTP security, meaning that measures beyond OTP may prove necessary. More than just an improved OTP system, the banking industry may need effective leadership that will address this concern quickly.
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According to Agarwal’s statement, the recent action of RBI against Kotak Bank and other financial institutions is triggered by your efforts towards curbing fraudulent activities.
According to Aggarwal, the actions of the regulatory body stop what you can do and this should be a cause of embarrassment.
He said that it is understandable from outside why no analyst is talking about this matter.
Why is it not being asked that your bank trades at the highest multiple in the world?
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Agarwal cautioned against investing in the technology, saying the risks are so great that the effort is not warranted. Aggarwal said that compared to Citibank and Japan Morgan, his bank operates at three times the normal rate.
Despite this, he cautioned that potential investors who receive information about the bank’s operations should not have unrealistic expectations for the stock.
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