HDFC Bank fined ₹1.91 crore, Axis Bank penalized ₹1 crore for non-compliance with RBI directions

The RBI has fined HDFC Bank 1.91 crore and Axis Bank 1 crore for regulatory non-compliance. HDFC Bank violated deposit regulations and customer service guidelines, while Axis Bank breached the Banking Regulation Act and KYC rules, impacting agricultural loans and account management.

Riya R Alex
Published10 Sep 2024, 10:54 PM IST
RBI fines Axis Bank and HDFC Bank.
RBI fines Axis Bank and HDFC Bank.

The Reserve Bank of India (RBI) has fined HDFC Bank Limited Rs1.91 crore and penalized Axis Bank Limited 1 crore.

The central bank said in a statement that HDFC Bank, India's leading private sector bank, has been charged a penalty for non-compliance with certain directions of RBI on interest rates on deposits, recovery agents engaged by banks and customer service in banks.

The central bank conducted a statutory inspection on March 31, 2022, and issued a show cause notice. Based on the show cause notice and oral hearings conducted by the RBI, it decided to penalise HDFC Bank for giving depositors gifts costing more than 250 crore when accepting deposits.

Also Read | RBI to remain divergent among central banks, maintain status quo till FY25: SBI

The bank also opened savings accounts for ineligible entities and failed to ensure customers were not contacted before 7 a.m. and after 7 p.m.

Meanwhile, the central bank has fined Axis Bank for violating certain regulations of the Banking Regulation Act, 1949, and for non-compliance with specific directions issued by RBI on interest rates on deposits, know your customer (KYC), and credit flow to agriculture for collateral-free agricultural loans.

The Central Bank conducted a statutory inspection regarding Axis Bank’s financial position on March 31, 2023. Based on the inspection, the central bank issued a show cause notice for non-compliance, the bank said in a statement.

Based on Axis Bank’s reply to the notice, RBI concluded that the bank opened savings accounts for ineligible entities and allotted multiple customer identification codes to a few customers instead of a Unique Customer Identification Code (UCIC).

Also Read | RBI deputy governor cautions fintech platform lenders on privacy concerns

Additionally, Axis Bank obtained collateral security for agricultural loans up 1.60 lakh in some cases, and one of its wholly owned subsidiaries took over the business of a service provider, which is not permitted by the RBI.

Also Read | Armed with RBI sanction, first fintech self regulator to ramp up enforcement

Pertinently, HDFC Bank reported a drop of two per cent in net profit at 16,175 crore in April-June quarter results for fiscal 2024-25 (Q1FY25).

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First Published:10 Sep 2024, 10:54 PM IST
Business NewsNewsHDFC Bank fined ₹1.91 crore, Axis Bank penalized ₹1 crore for non-compliance with RBI directions

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