 "RBI slaps penalties on Axis, HDFC Bank for non-compliance with directives")
The Reserve Bank of India (RBI) has penalised HDFC Bank, and Axis Bank for Rs 1 crore and Rs 1.91 crore, respectively.
According to an RBI press release, HDFC Bank, the country’s largest private sector lender, opened certain savings deposit accounts in the name of eligible entities and gave gifts.
These were in the form of paying the first-year premium for the complimentary life insurance cover — costing more than Rs 250 — to customers at the time of accepting certain deposits.
Additionally, the bank failed to ensure that customers are not contacted after 7 pm and before 7 am.
RBI had conducted statutory inspection of the bank with reference to its financial position as on March 31, 2022, based on the supervisory findings of non-compliance.
Consequently, 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 directions.
And, after considering the bank’s reply to the notice and additional and oral submissions made during the personal hearing, the RBI decided that the charges against the bank were sustained.
Meanwhile, RBI also found that Axis Bank – the third largest private sector lender – had opened certain savings deposit accounts in the name of ineligible entities.
Axis allotted multiple identification codes to certain customers instead of a Unique Customer Identification Code (UCIC) for each customer. It then obtained collateral security for agricultural loans up to Rs 160,000 in certain cases.
Additionally, the bank’s wholly-owned subsidiary undertook the business of technology service provider, which is not permissible. A banking company — under Section 6 of the BR Act — cannot undertake such a business, the RBI added.