RBI slaps Rs 91 lakh penalty on HDFC Bank for many non-compliances
MUMBAI: The Reserve Bank has slapped a Rs 91 lakh penalty on HDFC Bank for deficiencies in statutory and regulatory compliances, including those related to the know your customer (KYC) norms. In a note, the RBI said the penalty has been imposed “for contravention of certain provisions of the Banking Regulation Act and non-compliance with certain directions on ‘interest rate on advances', 'guidelines on managing risks and code of conduct in outsourcing of financial services by banks' and the not properly meeting the KYC norms.
”In 2020, the HDFC Bank was banned from onboarding new credit card customers for its poor IT safety systems and the ban lasted more than year till the bank could rectify and improve its IT systems. With over 25 million customers, HDFC Bank is the largest credit card issuer in the country.
The penal action comes after a statutory inspection for supervisory evaluation of the country’s second largest bank was conducted with reference to its financial position as on March 31, 2024, the central bank said, adding the punitive measure is for the supervisory findings of non-compliance with the provisions of the Banking Regulation Act, RBI directions and related correspondence in that regard and bank’s response to the its notice was not satisfactory.
RBI said the bank adopted multiple benchmarks within the same loan category, and it outsourced the function of determining compliance with KYC norms of certain customers to its outsourcing agents. Also, a wholly-owned subsidiary of the bank undertook business which is not a permissible under section 6 of the BR Act, the RBI said.The central bank, however, said the penalty is based on deficiencies in statutory and regulatory compliances and is not on the validity of any transaction or agreement entered into by the bank with its customers.