RBI imposes monetary penalty of ₹75 lakh on HDFC Bank for violating customer KYC norms

The Reserve Bank of India (RBI) announced on Wednesday, March 26, that it has imposed a monetary penalty of ₹75 lakh on HDFC Bank for deficiencies in certain regulatory compliances. “A penalty of ₹75 lakh on HDFC Bank has been imposed for non-compliance with certain directions issued by RBI on 'Know Your Customer' (KYC),” said the RBI in its statement today.

"This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949,” said the RBI in a press release dated March 26, 2025.

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Why did RBI penalize HDFC Bank?

According to the RBI, India's largest private lender, did not categorise certain customers into low, medium, or high-risk categories based on its assessment and risk perception and allotted multiple identification codes to certain customers instead of a Unique Customer Identification Code (UCIC) for each customer.

RBI said in the press release: “A Statutory Inspection for Supervisory Evaluation (ISE 2023) of the bank was conducted with reference to its financial position as of March 31, 2023.” The inspection found violations.

“Based on supervisory findings of noncompliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions," said the central bank in its circular.

RBI said in the press release: “After considering the bank’s reply to the notice and additional submissions made by it, RBI found, inter alia, that the following charges against the bank were sustained, warranting imposition of monetary penalty.

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The bank did not categorise certain customers into low, medium, or high-risk categories based on its assessment and risk perception, and the bank allotted multiple customer identification codes to certain customers instead of a Unique Customer Identification Code (UCIC) for each customer.

“This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Imposing a monetary penalty is without prejudice to any other action RBI may initiate against the bank,” said the RBI.

RBI imposes penalty on Punjab & Sind Bank

In another statement, the RBI said Punjab & Sind Bank has penalized ₹68.20 lakh for non-compliance with directions on 'Creation of a Central Repository of Large Common Exposures—Across Banks' and 'Financial Inclusion—Access to Banking Services—Basic Savings Bank Deposit Account (BSBDA)'.

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The RBI has also penalized KLM Axiva Finvest with ₹10 lakh for non-compliance with requirements relating to dividend declaration. In all cases, the central bank said the penalties are based on deficiencies in regulatory compliance and are not intended to be pronounced upon the validity of any transaction or agreement entered into by the entities with their customers.