RBI Imposes Rs 2.91 Crore Penalties on Axis Bank and HDFC Bank

The RBI has penalized Axis Bank and HDFC Bank with a total fine of Rs 2.91 crore for failing to comply with statutory regulations. Axis Bank faces a Rs 1.91 crore penalty for several violations including KYC and agricultural loans, while HDFC Bank’s Rs 1 crore penalty is for issues like inappropriate customer service practices.

The Reserve Bank of India (RBI) on Tuesday announced penalties totaling Rs 2.91 crore on Axis Bank and HDFC Bank for statutory and regulatory compliance deficiencies.

An RBI statement said Axis Bank was fined Rs 1.91 crore for contraventions related to the Banking Regulation Act, including lapses in 'Interest Rate on Deposits,' 'Know Your Customer (KYC)' norms, and 'Credit Flow to Agriculture-Collateral free agricultural loans'.

Meanwhile, HDFC Bank faced a Rs 1 crore penalty for not adhering to directions on 'interest rate on deposits,' and issues with 'recovery agents engaged by banks' and 'customer service in banks,' the statement added.

A supervisory evaluation conducted by RBI revealed Axis Bank opened savings deposit accounts for ineligible entities and issued multiple customer identification codes instead of a Unique Customer Identification Code (UCIC). Further, it was found that the bank obtained collateral security for agricultural loans up to Rs 1.60 lakh and had a subsidiary engaging in impermissible business activities.

HDFC Bank was scrutinized based on its financial position as on March 31, 2022. The supervisory findings indicated non-compliance with RBI directions, leading to the penalty. Specific discrepancies included giving gifts exceeding Rs 250 for accepting deposits, and failing to ensure customers are not contacted before 7 AM or after 7 PM.

The RBI clarified that these penalties are solely related to compliance deficiencies and do not affect the validity of any transactions between the banks and their customers.

(With inputs from agencies.)