RBI fines Axis Bank and HDFC Bank 2.91 crore for regulatory compliance deficiencies.

The Reserve Bank of India (RBI) announced on Tuesday that it has imposed penalties on Axis Bank and HDFC Bank for various violations. Axis Bank was penalized Rs 1.91 crore for contravening certain provisions of the Banking Regulation Act and non-compliance with directions related to ‘Interest Rate on Deposits’, ‘Know Your Customer (KYC)’, and ‘Credit Flow to Agriculture-Collateral free agricultural loans’. Additionally, HDFC Bank was penalized Rs 1 crore for non-compliance with directions related to ‘interest rate on deposits’, ‘recovery agents engaged by banks’ and ‘customer service in banks’.

For Axis Bank, the RBI conducted a supervisory evaluation with reference to its financial position as of March 31, 2023, and reviewed the activities of its subsidiary company. Following this, the bank was issued a notice. Despite the bank’s reply to the notice, the RBI sustained charges against the bank, leading to the imposition of the monetary penalty.

The central bank found that Axis Bank had opened savings deposit accounts in the name of ineligible entities, allocated multiple customer identification codes to certain customers instead of a Unique Customer Identification Code, and obtained collateral security for agricultural loans in certain cases. The bank’s wholly owned subsidiary also engaged in a business that was not permissible for a banking company. Regarding HDFC Bank, the RBI conducted a statutory inspection for supervisory evaluation with reference to its financial position as of March 31, 2022.

Subsequently, a notice was issued to the bank. After considering the bank’s reply to the notice, additional submissions, and oral submissions during the personal hearing, the RBI found sustained charges against the bank, leading to the imposition of monetary penalty. The bank was found to have given gifts to depositors at the time of accepting certain deposits, opened 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.

The central bank emphasized that the penalties were based on deficiencies in statutory and regulatory compliance and were not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers. *(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed. )*