New Delhi, Sep 10 (UNI) The Reserve Bank of India on Tuesday said it has imposed financial penalty on two leading private lenders – HDFC Bank and Axis Bank for non-compliance with certain directions and contravention of certain provisions of the regulation.
The RBI has, by an order dated September 03, 2024 imposed a monetary penalty of Rs 1 crore on HDFC Bank Limited for non-compliance with certain directions issued by RBI on ‘Interest Rate on Deposits’, ‘Recovery Agents engaged by Banks’ and ‘Customer Service in Banks’ read with the BCSBI Code and ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’, the RBI said in a statement.
The Statutory Inspection for Supervisory Evaluation (ISE 2022) of the bank was conducted by RBI with reference to its financial position as on March 31, 2022, RBI said adding based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.
After considering the bank’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found, inter alia, that the various charges against the bank were sustained, warranting imposition of monetary penalty.
The bank, according to RBI, gave gifts (in the form of paying first-year premium for the complimentary life insurance cover) costing more than Rs 250 to the depositors at the time of accepting certain deposits; opened certain savings deposit accounts in the name of ineligible entities; and failed to ensure that customers are not contacted after 7 pm and before 7 am.
Similarly, The RBI has, by an order dated September 3, 2024, imposed a monetary penalty of Rs 1.91 crore on Axis Bank Limited for contravention of certain provisions of the Banking Regulation Act, and non-compliance with certain directions issued by RBI on ‘Interest Rate on Deposits’, ‘Know Your Customer (KYC)’ and ‘Credit Flow to Agriculture- Collateral free agricultural loans’.
After considering the bank’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found, inter alia, that the several charges against the bank were sustained, warranting imposition of monetary penalty on Axis Bank, the RBI said.
According to RBI, the Axis Bank opened certain savings deposit accounts in the name of ineligible entities; The bank had allotted multiple customer identification code to certain customers instead of a Unique Customer ldentification Code (UCIC) for each customer; The bank had obtained collateral security for agricultural loans up to Rs 1.60 lakh in certain cases; and A wholly owned subsidiary of the bank undertook business of technology service provider, which is not permissible business that can be undertaken by a banking company under Section 6 of the Banking Regulation Act.
The action on HDFC Bank and Axis Bank, the RBI said, is based on deficiencies in statutory and regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the banks.
