RBI Imposes ₹75 Lakh Penalty on HDFC Bank for KYC Non-Compliance

The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹75 lakh on HDFC Bank for non-compliance with certain directions related to Know Your Customer (KYC) norms.

As of 1:13 PM on March 27, HDFC Bank share price was trading at ₹1,836.75, up ₹30.20 or 1.67% for the day, showing an 8.00% gain over the past month and 27.49% over the past year.

Details of the Violation

According to the RBI’s statement, a Statutory Inspection for Supervisory Evaluation (ISE 2023) was conducted based on the bank’s financial position as of March 31, 2023. During the inspection, it was observed that HDFC Bank had not categorised certain customers into low, medium, or high-risk categories as required under KYC regulations. Additionally, the bank had allotted multiple customer identification codes to some individuals instead of assigning a Unique Customer Identification Code (UCIC) for each customer.

RBI’s Response and Action

Following the inspection, a notice was issued to HDFC Bank asking why a penalty should not be imposed. After reviewing the bank’s reply and supporting documents, the RBI found that the violations were sustained. The penalty was imposed under the provisions of Section 47A(1)(c), read with Section 46(4)(i) of the Banking Regulation Act, 1949.

The RBI clarified that the penalty is based on deficiencies in regulatory compliance and does not impact the validity of any transaction or agreement made by the bank with its customers.

Penalties on Other Institutions

In a separate order, the RBI also imposed a monetary penalty of ₹68.20 lakh on Punjab & Sind Bank. The bank failed to report certain borrowers with non-fund-based exposure of ₹5 crore and above to the Central Repository of Information on Large Credits (CRILC). It also allowed some Basic Savings Bank Deposit Account (BSBDA) holders to open regular savings accounts, which violates RBI norms.

Additionally, KLM Axiva Finvest was fined ₹10 lakh for non-compliance with dividend declaration norms.

Conclusion

All penalties were issued for regulatory non-compliance. The RBI stated that these actions do not affect any existing agreements or transactions between the institutions and their customers.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.