On September 3, 2024, the Reserve Bank of India (RBI) issued an order imposing a monetary penalty of ₹1 crore on HDFC Bank Limited for failing to comply with several regulatory directives. This penalty, levied under the authority granted by Section 47A(1)(c) read with Section 46(4) of the Banking Regulation Act, 1949, addresses breaches related to directives on ‘Interest Rate on Deposits,’ ‘Recovery Agents engaged by Banks,’ and ‘Customer Service in Banks,’ as well as the Banking Codes and Standards Board of India (BCSBI) Code and guidelines on managing risks and conduct in outsourcing financial services.
The basis for this penalty emerged from the Statutory Inspection for Supervisory Evaluation (ISE 2022), which assessed the bank’s compliance with regulatory norms as of March 31, 2022. The RBI identified several deficiencies in HDFC Bank’s practices, prompting the issuance of a show-cause notice to the bank. The notice sought an explanation for the alleged non-compliance and provided the bank an opportunity to address the concerns.
The RBI’s findings confirmed that HDFC Bank had breached specific regulatory guidelines. These breaches included the provision of gifts (in the form of first-year life insurance premiums) exceeding ₹250 to depositors, the opening of savings accounts in the names of ineligible entities, and the failure to adhere to regulations restricting customer contact to appropriate hours. The RBI's decision to impose the penalty followed a review of the bank’s responses, including written submissions and oral arguments during a personal hearing.
It is important to note that this monetary penalty focuses on rectifying the identified regulatory lapses and does not comment on the validity of transactions or agreements between the bank and its customers. The imposition of this fine is also without prejudice to any further actions that the RBI may consider in response to ongoing compliance issues with the bank
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