After RBI's torpedo, Kotak Mahindra plans to hire 400 engineers for a technology overhaul

Kotak Mahindra Bank is reportedly hiring around 400 engineers this year in a bid to upgrade its technology systems after coming under RBI fire for lapses.

Last week the RBI asked Kotak to stop adding clients digitally and issuing credit cards due to gaps in its IT infrastructure.

The RBI order on the lender has impacted the private lender's franchise and reputation even though its financial impact is expected to be minimal, its chief executive officer said. "The Reserve Bank of India order, obviously, has had an impact both on our franchise (and) our reputation, which does not feel good," Ashok Vaswani told a media briefing in Mumbai.

"...we are committed to coming back strongly; that's our number one priority."

The bank will double its efforts, resources and money in addressing IT-related issues, Vaswani said, adding that the bank currently spends 10% of total expenditure on IT.

Kotak is already working with the RBI to appoint an external auditor for IT systems and the process should be completed soon, he said.

The lender, according to a Bloomberg report, has already brought on board more than 500 engineers from scratch over the last two years, according to Milind Nagnur, the bank’s chief technology officer. 

Many of them are from Google and Amazon.com.  Kotak Mahindra Bank reported a 26% increase in fourth-quarter net profit, sharply exceeding analysts' expectations, buoyed by higher core lending income and healthy loan growth. The private lender's standalone net profit, excluding subsidiaries, rose to 41.33 billion rupees ($495.71 million) in the January-March quarter, from 34.96 billion rupees in the same period last year.