RBI imposes ₹75 lakh penalty on HDFC Bank, ₹68.2 lakh on Punjab & Sind Bank

According to RBI, the HDFC Bank did not categorise certain customers into low, medium or high risk category based on its assessment and risk perception

The Reserve Bank of India (RBI) has imposed monetary penalties on HDFC Bank and Punjab & Sind Bank for non-compliance with its regulatory guidelines, according to the press statement issued by the RBI on Wednesday (March 26). While HDFC Bank is slapped with a ₹75 lakh penalty for violations related to KYC norms, Punjab & Sind Bank was fined ₹68.2 lakh for lapses in reporting large exposures and maintaining basic savings accounts.

 

Explaining the reasons behind the penalty on HDFC Bank, RBI said that it had conducted a statutory inspection of the bank with reference to its financial position as on March 31, 2023. Based on supervisory findings of non-compliance with the central bank's directives, the RBI issued a notice to the bank advising it to show cause as to 'why penalty should not be imposed on it for its failure to comply with the said directions.'

 

HDFC Bank replied to the notice accordingly. Considering the bank’s reply and additional submissions made by it, RBI found certain discrepancies. 'Certain charges against the bank were sustained, warranting imposition of monetary penalty,' RBI said. 

 

Violation of RBI directions

 

One discrepancy was that the bank did not categorise certain customers into low, medium or high risk categories based on its assessment and risk perception, which is mandatory as per the RBI directives.

 

Additionally, the bank allotted multiple customer identification codes to certain customers instead of a Unique Customer Identification Code (UCIC) for each customer, which is also a violation of RBI's directions. 

 

RBI clarified that this particular action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. "Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.," RBI said. 

 

Penalty on Punjab & Sind Bank

 

In another order, RBI also imposed monetary penalty of ₹68.2 lakh on Punjab & Sind Bank for non-compliance with guidelines issued by the central bank on ‘Creation of a Central Repository of Large Common Exposures – Across Banks’ and ‘Financial Inclusion - Access to Banking Services – Basic Savings Bank Deposit Account (BSBDA)’. 

 

According to the RBI, the bank did not report certain borrowers with non-fund based exposure of ₹5 crore and above to CRILC, which is a violation of RBI guidelines. Further, the bank allowed certain BSBDA holders to open Savings Bank Deposit Accounts.