HDFC Bank Fined INR 91 Lakh by RBI Over Compliance Failures
On November 28, HDFC Bank Ltd stated that the Reserve Bank of India (RBI) has levied an INR 91 lakh punishment. In a press release, the RBI noted violations of the Banking Regulation Act as well as failure to follow guidelines pertaining to interest rates, outsourcing, and Know Your Customer (KYC) standards. In an exchange filing, HDFC Bank stated that it has taken corrective measures to resolve the issue, and HDBFS has also taken corrective action. It stated that it and HDBFS are following the RBI's instructions.
What Forced RBI for Such Action?
The action comes after the RBI's Statutory Inspection for Supervisory Evaluation (ISE 2024), which was carried out using the lender's March 31, 2024, financial status as a foundation. The regulator determined that HDFC Bank had not complied with the guidelines on "Interest Rate on Advances" and "Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services" after examining the bank's response and further comments.
According to the report, the bank was charged with "sustained, warranting the imposition of a monetary penalty." According to the RBI, HDFC Bank violated regulatory rules by outsourcing KYC compliance checks for specific customers to its agents and adopting various benchmarks within the same loan category.
RBI Open to Take Further Regulatory Action
RBI has made it clear that procedural and compliance violations are the focus of the regulatory action. It does not cast doubt on the validity of any contracts or transactions that are made between the bank and its clients. Additionally, if necessary, the central bank has left the door open for additional regulatory actions.
Furthermore, a fully owned subsidiary of a private sector bank ran a business that was prohibited by Section 6 of the Banking Regulation Act. The RBI's determination to enforce compliance and operational standards is further demonstrated by the INR 91 lakh punishment levied against HDFC Bank. The problems identified include loan procedures, subsidiary management, and KYC standards, underscoring the significance of strong internal control systems throughout the banking industry in India.
|
Quick Shots |
|
•RBI has imposed a INR 91 lakh
penalty on HDFC Bank for multiple regulatory and compliance lapses. •Violations relate to the Banking
Regulation Act, interest rate guidelines, outsourcing norms, and KYC
compliance. •RBI’s findings came from the ISE
2024 inspection, based on the bank’s financial position as of March 31, 2024. •HDFC Bank was found using different
benchmarks within the same loan category, violating interest rate norms. •The bank also outsourced KYC checks
for certain customers to external agents, breaching regulatory rules. •RBI stated the violations were
“sustained”, warranting a monetary penalty. •HDFC Bank and its subsidiary HDBFS
have taken corrective actions and are following RBI directions. |
Must have tools for startups - Recommended by StartupTalky
- Convert Visitors into Leads- SeizeLead
- Website Builder SquareSpace
- Manage your business Smoothly Google Business Suite
