RBI Imposes Rs 91 Lakh Penalty On HDFC Bank - Know All About It

Private sector banking giant HDFC Bank Ltd informed on November 28 that India's apex bank RBI had imposed a fine of Rs 91 lakh.

According to an official release, RBI informed that the move was backed by breach of provisions of the Banking Regulation Act, and non-compliance with directions linked to interest rates, outsourcing practices and Know Your Customer (KYC) regulations. 

In an exchange filing, HDFC Bank said it has undertaken corrective action to address the issue, HDBFS too has taken corrective actions. It said it, along with HDBFS, are in compliance with the RBI's directions.

This comes after RBI’s Statutory Inspection for Supervisory Evaluation (ISE 2024), conducted on the basis of the lender’s financial position as of March 31, 2024.

Post reviewing HDFC Bank’s response and submissions, the regulator noted that the Mumbai-headquartered bank had failed to comply with directions on ‘Interest Rate on Advances’ and ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services’.

Also Read: RBI Imposes Rs 91 Lakh Penalty On HDFC Bank - Know Why

It said the charges against the bank were "sustained, warranting the imposition of a monetary penalty."

The RBI said that HDFC Bank had adopted multiple benchmarks within the same loan category and the bank had outsourced KYC compliance checks for certain customers to its agents, violating regulatory guidelines.

Additionally, one of the private sector bank's wholly owned subsidiary operated a business not permitted under Section 6 of the Banking Regulation Act.

The RBI said that HDFC Bank had adopted multiple benchmarks within the same loan category and the bank had outsourced KYC compliance checks for certain customers to its agents, violating regulatory guidelines.

Additionally, one of the private sector bank's wholly owned subsidiary operated a business not permitted under Section 6 of the Banking Regulation Act.

The shares of HDFC Bank ended 0.28% lower at Rs 1,006.70 apiece on Friday, November 28.