RBI imposes penalty on HDFC Bank, Bank of America for violating FEMA norms

The Reserve Bank of India (RBI) on Thursday imposed a monetary penalty of Rs 10,000 each on HDFC Bank and Bank of America, citing a violation of reporting requirements under the Liberalised Remittance Scheme of the Foreign Exchange Management Act (FEMA).

RBI fined HDFC Bank, a leading private sector bank, for accepting deposits from non-residents and flouting RBI’s directions under the Liberalised Remittance Scheme of FEMA, 1999.

Meanwhile, in the exchange filing, “HDFC Bank said that it did not obtain RBI’s approval for maintaining current and fixed deposit accounts of a foreign bank post cancellation of their license by RBI, which was in contravention to para 13 of AP (DIR Series) Circular no. 67 dated May 5, 2016.”

A similar fine of Rs 10,000 has been levied on Bank of America for violating FEMA regulations.

"The Reserve Bank of India has imposed a monetary penalty of Rs 10,000 (Rupees ten thousand only) on Bank of America, N.A. in exercise of powers vested in the Reserve Bank under the provisions of Section 11(3) of FEMA, 1999, for violation of the Reserve Bank of India’s instructions on reporting requirements under the Liberalised Remittance Scheme of FEMA 1999," read the circular.

The central bank had issued a Show Cause notice to the lenders and, based on the responses, has levied the penalty.

RBI further added that the action is based on regulatory deficiencies and it does not affect the validity of transactions undertaken by the bank with its customers.