The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 1.91 crore on Axis Bank, and of Rs 1 crore on HDFC Bank.
Axis Bank was penalised for contravention of provisions of Section 19 (1) (a) of the Banking Regulation Act, 1949 (BR Act), and non-compliance with certain directions issued by RBI on ‘Interest Rate on Deposits’, ‘Know Your Customer (KYC)’ and ‘Credit Flow to Agriculture- Collateral free agricultural loans, RBI said.
While the penalty was imposed on HDFC Bank for non-compliance with certain directions issued by RBI on ‘Interest Rate on Deposits’, ‘Recovery Agents engaged by Banks’ and ‘Customer Service in Banks’ read with the BCSBI Code and ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’.
RBI said that Axis Bank has opened certain savings deposit accounts in the name of ineligible entities. The bank had allotted multiple customer identification code to certain customers instead of a Unique Customer ldentification Code (UCIC) for each customer.
Further, RBI said that Axis bank had obtained collateral security for agricultural loans upto ₹1.60 lakh in certain cases; and also a wholly owned subsidiary of the bank undertook business of technology service provider, which is not permissible business that can be undertaken by a banking company under Section 6 of the BR Act.
For HDFC, the central bank said HDFC Bank gave gifts, in the form of paying first-year premium for the complimentary life insurance cover, costing more than ₹250 to the depositors at the time of accepting certain deposits.
It also opened certain savings deposit accounts in the name of ineligible entities; and failed to ensure that customers are not contacted after 7 pm and before 7 am.
The action is based on deficiencies in statutory and regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, RBI said.
