RBI slaps a fine of Rs one crore on HDFC Bank for KYC breach

Reserve Bank of India has imposed a monetary penalty of Rs one crore on private sector lender HDFC Bank for non-compliance with Master Direction on Know Your Customer (KYC).

RBI had done a scrutiny of 39 current accounts opened by bank’s customers for bidding in Initial Public Offer. The investigation revealed that the bank had failed to exercise ongoing due diligence in those accounts. The transactions in these current accounts were disproportionate to the declared income and profile of the customers, RBI said in a statement today.

The observations in RBI’s on-site inspection of HDFC Bank for the financial year ended March 31, 2017 had triggered the scrutiny.

RBI had issued show cause notice to bank as to why penalty should not be imposed for non-compliance.

After considering the replies and oral submissions made in the personal hearing, RBI came to the conclusion that non-compliance warranted imposition of monetary penalty.

This action (imposition of fine) is based on the deficiencies in regulatory compliance. It is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, RBI said.