Banking Violations: RBI Imposes Fines on HDFC Bank, Punjab & Sind Bank
Banking Violations: RBI Imposes Fines on HDFC Bank, Punjab & Sind Bank
The Reserve Bank of India (RBI) has imposed monetary penalties on HDFC Bank and Punjab & Sind Bank for failing to comply with its regulatory guidelines. In a press statement issued on Wednesday, the central bank announced a ₹75 lakh fine on HDFC Bank and a ₹68.2 lakh fine on Punjab & Sind Bank for different violations.
Penalty on HDFC Bank
RBI conducted a statutory inspection of HDFC Bank based on its financial position as of March 31, 2023. The inspection revealed that the bank had not fully complied with RBI’s directions. As a result, the central bank issued a notice to HDFC Bank, asking why a penalty should not be imposed for the violations. After reviewing the bank’s response and additional submissions, RBI found discrepancies that warranted a monetary penalty.
The violations included:
- Failure to classify customers by risk level: HDFC Bank did not categorize certain customers as low, medium, or high risk based on its assessment, which is required under RBI guidelines.
- Multiple customer identification codes: The bank assigned multiple identification codes to some customers instead of a Unique Customer Identification Code (UCIC), violating RBI’s instructions.
RBI clarified that the penalty is strictly for regulatory lapses and does not impact the validity of any transactions between the bank and its customers. Additionally, this penalty does not prevent RBI from taking further action if needed.
Penalty on Punjab & Sind Bank
In a separate order, RBI imposed a ₹68.2 lakh penalty on Punjab & Sind Bank for not following rules related to reporting large exposures and maintaining basic savings accounts.
The violations included:
- Non-reporting of large exposures: The bank failed to report certain borrowers with non-fund-based exposures of ₹5 crore and above to the Central Repository of Information on Large Credits (CRILC), as required by RBI guidelines.
- Mismanagement of basic savings accounts: The bank allowed some Basic Savings Bank Deposit Account (BSBDA) holders to open regular savings accounts, which goes against RBI’s financial inclusion rules.
RBI emphasized that these penalties are due to non-compliance with regulatory instructions and do not question the validity of any agreements between the banks and their customers.
