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What is the story about?
HDFC Bank Ltd. on Friday, November 28, said the Reserve Bank of India (RBI) has imposed a fine of ₹91 lakh.
RBI, in a press release, cited breach of provisions of the Banking Regulation Act, and non-compliance with directions related to interest rates, outsourcing practice,s and Know Your Customer (KYC) norms.
HDFC Bank, in an exchange filing, said it has undertaken corrective action to address the issue, HDBFS too has taken corrective actions. It said it, along with HDBFS, are in compliance with the RBI's directions.
The action follows the RBI’s Statutory Inspection for Supervisory Evaluation (ISE 2024), conducted on the basis of the lender’s financial position as of March 31, 2024.
After reviewing HDFC Bank’s response and additional submissions, the regulator concluded that the bank had failed to comply with directions on ‘Interest Rate on Advances’ and ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services’. It
said the charges against the bank were "sustained, warranting the imposition of a monetary penalty."
The RBI said that HDFC Bank had adopted multiple benchmarks within the same loan category and the bank had outsourced KYC compliance checks for certain customers to its agents, violating regulatory guidelines.
Additionally, one of the private sector bank's wholly owned subsidiary operated a business not permitted under Section 6 of the Banking Regulation Act.
The apex bank emphasised that its action pertains to deficiencies in statutory and regulatory compliance and does not affect the validity of customer transactions or agreements. The penalty is also without prejudice to further supervisory action that may be initiated by RBI against the bank, it added.
Shares of HDFC Bank closed 0.28% lower at ₹1,006.70 ahead of the announcement on Friday, November 28.
Also read: New RBI rule: Banks move to secure ‘.bank.in’ domains to curb online fraud
RBI, in a press release, cited breach of provisions of the Banking Regulation Act, and non-compliance with directions related to interest rates, outsourcing practice,s and Know Your Customer (KYC) norms.
HDFC Bank, in an exchange filing, said it has undertaken corrective action to address the issue, HDBFS too has taken corrective actions. It said it, along with HDBFS, are in compliance with the RBI's directions.
The action follows the RBI’s Statutory Inspection for Supervisory Evaluation (ISE 2024), conducted on the basis of the lender’s financial position as of March 31, 2024.
After reviewing HDFC Bank’s response and additional submissions, the regulator concluded that the bank had failed to comply with directions on ‘Interest Rate on Advances’ and ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services’. It
The RBI said that HDFC Bank had adopted multiple benchmarks within the same loan category and the bank had outsourced KYC compliance checks for certain customers to its agents, violating regulatory guidelines.
Additionally, one of the private sector bank's wholly owned subsidiary operated a business not permitted under Section 6 of the Banking Regulation Act.
The apex bank emphasised that its action pertains to deficiencies in statutory and regulatory compliance and does not affect the validity of customer transactions or agreements. The penalty is also without prejudice to further supervisory action that may be initiated by RBI against the bank, it added.
Shares of HDFC Bank closed 0.28% lower at ₹1,006.70 ahead of the announcement on Friday, November 28.
Also read: New RBI rule: Banks move to secure ‘.bank.in’ domains to curb online fraud
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