Reserve Bank of India (RBI) slaps Rs 91 lakh penalty on HDFC Bank

Key facts

• The Reserve Bank of India (RBI) imposed a penalty of Rs 91 lakh on HDFC Bank.
• The penalty was for violating certain provisions of the Banking Regulation Act and non-compliance with certain directions.
• Deficiencies included those related to Know Your Customer (KYC) requirements.
• Non-compliance also pertained to ‘Interest Rate on Advances’ and ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’.
• A Statutory Inspection for Supervisory Evaluation of HDFC Bank was conducted with reference to its financial position as on March 31, 2024.
• HDFC Bank adopted multiple benchmarks within the same loan category.
• HDFC Bank outsourced the function of determining compliance with KYC norms of certain customers to its outsourcing agents.
• A wholly-owned subsidiary of HDFC Bank undertook business not permissible under Section 6 of the Banking Regulation (BR) Act.