New Delhi: The Reserve Bank of India (RBI) has imposed monetary penalties on Axis Bank and HDFC Bank for violations of regulatory compliance. The penalties were announced on September 10, 2024, with Axis Bank being fined Rs 1.91 crore and HDFC Bank Rs 1 crore.
Axis Bank Violations: Axis Bank was fined Rs 1.91 crore following a statutory inspection conducted based on its financial position as of March 31, 2023. The inspection, part of the Supervisory Evaluation (ISE 2023), revealed several violations of the Banking Regulation Act, 1949. These included allowing ineligible entities to open savings accounts, failure to provide unique customer identification codes (UCIC), and improper collateral security for agricultural loans up to Rs 1.60 lakh. Additionally, the bank’s fully-owned subsidiary acted as a technology service provider, which is prohibited under current regulations.
HDFC Bank Violations: HDFC Bank was fined Rs 1 crore after an inspection based on its financial position as of March 31, 2022 (ISE 2022). The RBI found the bank in violation of guidelines concerning interest rates on deposits, use of recovery agents, and customer service practices. Specifically, HDFC Bank offered life insurance gifts beyond the permissible Rs 250 limit, opened accounts for ineligible entities, and failed to follow guidelines regarding customer contact hours.
The RBI clarified that these penalties are meant to address regulatory lapses and do not affect the validity of any transactions made by the banks. Both Axis Bank and HDFC Bank saw their stock prices rise slightly despite the announcement, reflecting continued market confidence.
