RBI has imposed a fine of Rs 91 lakh on the private sector HDFC Bank
The Reserve Bank of India has imposed a fine of Rs 91 lakh on HDFC Bank. The fine was imposed for violating certain provisions of the Banking Regulation Act. The RBI has expressed displeasure with HDFC Bank over deficiencies in complying with legal and regulatory requirements related to “Know Your Customer” (KYC).
The bank has been fined for violating certain rules of the Banking Regulation Act, failing to comply with conditions on loan interest rates, failing to follow risk management and code of conduct guidelines for outsourcing of financial services, and failing to comply with certain KYC instructions, said the Reserve Bank.
The Reserve Bank stated that an investigation was conducted to conduct a supervisory evaluation of HDFC Bank’s financial position as of March 31, 2024. Based on non-compliance with the provisions of the Banking Regulation Act, RBI directives, and related correspondence, the RBI issued a notice to the bank. After considering the bank’s response and additional information provided by it, the Reserve Bank found that the allegations against HDFC Bank were substantiated and warranted the imposition of a penalty.
HDFC Bank had adopted multiple benchmarks within the same loan category, and had outsourced the task of ensuring compliance with KYC norms for certain customers to its outsourcing agents. Furthermore, a wholly-owned subsidiary of the bank engaged in business activities that are prohibited for a banking company under Section 6 of the Banking Regulation Act.
