The Reserve Bank of India (RBI) has imposed penalties on Axis Bank and HDFC Bank, totaling ₹2.91 crore, for regulatory compliance lapses.
Key Highlights:
- Axis Bank Penalty:
- Amount: ₹1.91 crore
- Reasons:
- Violations of the Banking Regulation Act.
- Non-compliance with regulations related to:
- Interest Rate on Deposits.
- Know Your Customer (KYC).
- Credit Flow to Agriculture, specifically Collateral-Free Agricultural Loans.
- The bank had opened savings accounts for ineligible entities.
- Issued multiple Customer Identification Codes instead of a Unique Customer Identification Code (UCIC).
- Accepted collateral for agricultural loans exceeding ₹1.60 lakh, violating rules.
- One of Axis Bank’s subsidiaries was found involved in technology services, which is not allowed for banking companies.
- HDFC Bank Penalty:
- Amount: ₹1 crore
- Reasons:
- Non-compliance with RBI directives regarding:
- Interest Rate on Deposits.
- Recovery Agents Engaged by Banks.
- Customer Service in Banks.
- The bank offered gifts such as complimentary life insurance by paying the first-year premium at the time of account opening, exceeding the ₹250 limit set by RBI.
- Opened accounts for ineligible entities.
- Failed to ensure that customers were not contacted between 7 pm and 7 am, violating customer service guidelines.
- Non-compliance with RBI directives regarding:
RBI’s Inspection and Actions:
The RBI’s inspection of Axis Bank’s financial position (as of March 31, 2023) and HDFC Bank’s position (as of March 31, 2022) revealed several compliance violations in both cases.
RBI stated that the penalties were imposed based on deficiencies in statutory and regulatory compliance and are not meant to question the validity of transactions or agreements between the banks and their customers.
The imposition of penalties does not prevent the RBI from taking further action if needed.
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