HDFC Bank fined ₹1.91 crore, Axis Bank penalized ₹1 crore for non-compliance with RBI directions

The Reserve Bank of India (RBI) has fined HDFC Bank Limited Rs1.91 crore and penalized Axis Bank Limited ₹1 crore.

The central bank said in a statement that HDFC Bank, India's leading private sector bank, has been charged a penalty for non-compliance with certain directions of RBI on interest rates on deposits, recovery agents engaged by banks and customer service in banks.

The central bank conducted a statutory inspection on March 31, 2022, and issued a show cause notice. Based on the show cause notice and oral hearings conducted by the RBI, it decided to penalise HDFC Bank for giving depositors gifts costing more than ₹250 crore when accepting deposits.

The bank also opened savings accounts for ineligible entities and failed to ensure customers were not contacted before 7 a.m. and after 7 p.m.

Meanwhile, the central bank has fined Axis Bank for violating certain regulations of the Banking Regulation Act, 1949, and for non-compliance with specific directions issued by RBI on interest rates on deposits, know your customer (KYC), and credit flow to agriculture for collateral-free agricultural loans.

The Central Bank conducted a statutory inspection regarding Axis Bank’s financial position on March 31, 2023. Based on the inspection, the central bank issued a show cause notice for non-compliance, the bank said in a statement.

Based on Axis Bank’s reply to the notice, RBI concluded that the bank opened savings accounts for ineligible entities and allotted multiple customer identification codes to a few customers instead of a Unique Customer Identification Code (UCIC).

Additionally, Axis Bank obtained collateral security for agricultural loans up ₹1.60 lakh in some cases, and one of its wholly owned subsidiaries took over the business of a service provider, which is not permitted by the RBI.

Pertinently, HDFC Bank reported a drop of two per cent in net profit at ₹16,175 crore in April-June quarter results for fiscal 2024-25 (Q1FY25).