RBI Imposes Penalties on Axis Bank and HDFC Bank for Regulatory Compliance Failures
RBI Imposes Penalties on Axis Bank and HDFC Bank for Regulatory Compliance Failures
Axis Bank and HDFC Bank face combined penalties of ₹2.91 crore for lapses in regulatory adherence.
The Reserve Bank of India (RBI) has fined Axis Bank and HDFC Bank a total of ₹2.91 crore for deficiencies in statutory and regulatory compliance. The RBI’s decision follows an assessment of the banks’ adherence to various regulatory requirements.
Penalties Imposed
– Axis Bank: Penalized ₹1.91 crore for violations related to the Banking Regulation Act and non-compliance with directions concerning ‘Interest Rate on Deposits,’ ‘Know Your Customer (KYC)’ norms, and ‘Credit Flow to Agriculture – Collateral Free Agricultural Loans.’
– HDFC Bank: Penalized ₹1 crore for failing to adhere to directives on ‘Interest Rate on Deposits,’ ‘Recovery Agents Engaged by Banks,’ and ‘Customer Service in Banks.’
Axis Bank’s Deficiencies
The RBI’s supervisory evaluation of Axis Bank, with reference to its financial position as of March 31, 2023, and a review of its subsidiary’s activities, revealed several compliance issues. The bank was found to have:
– Opened savings deposit accounts for ineligible entities.
– Issued multiple customer identification codes rather than a Unique Customer Identification Code (UCIC) for individual customers.
– Obtained collateral security for agricultural loans up to ₹1.60 lakh, which is against regulatory norms.
– Allowed its wholly owned technology services subsidiary to engage in activities not permitted for banking companies.
HDFC Bank’s Deficiencies
A statutory inspection of HDFC Bank, conducted based on its financial position as of March 31, 2022, identified non-compliance issues. The RBI noted that:
– The bank provided gifts (such as paying the first-year premium for complimentary life insurance) worth more than ₹250 to depositors at the time of deposit acceptance.
– Savings deposit accounts were opened for ineligible entities.
– The bank failed to adhere to regulations prohibiting customer contact outside the hours of 7 am to 7 pm.
RBI’s Statement
The RBI emphasized that the penalties were imposed due to deficiencies in regulatory compliance and do not comment on the validity of any specific transactions or agreements made by the banks with their customers. The central bank remains committed to ensuring adherence to regulatory standards and maintaining the integrity of the banking sector.
