RBI Fines Axis Bank and HDFC Bank for Compliance Failures

11 Sep 2024 , 10:02 AM

On September 10, 2024, the Reserve Bank of India (RBI) announced monetary penalties for Axis Bank Ltd and HDFC Bank Ltd due to regulatory non-compliance.

Axis Bank was fined ₹1.91 Crore following an inspection (ISE 2023) related to its financial position as of March 31, 2023. The penalty was imposed for violations of the Banking Regulation Act, 1949, including opening savings accounts for ineligible entities, failing to issue unique customer identification codes (UCIC), and improperly managing collateral for agricultural loans up to ₹1.60 lakh. Additionally, a subsidiary of Axis Bank was found to be engaged in non-permissible business activities.

HDFC Bank received a ₹1 Crore fine for failing to comply with RBI directives regarding deposit interest rates, recovery agents, and customer service practices. This penalty followed an inspection (ISE 2022) with reference to the bank’s financial status as of March 31, 2022. Violations included offering excessive gifts like paying first-year premiums for life insurance, opening accounts for ineligible entities, and failing to follow customer contact guidelines.

The RBI’s penalties aim to correct deficiencies in regulatory and statutory compliance, without questioning the legitimacy of transactions or agreements made by the banks.