RBI imposes Rs 1 crore penalty on HDFC over KYC violation

New Delhi: The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs one crore on HDFC Bank for non-compliance of Know Your Customer (KYC) norms.

The fine has been imposed taking into account the failure of the bank to adhere to the RBI’s KYC directive dated February 25, 2016. “This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers,” the RBI said.

It had made observations following an on-site inspection for supervisory evaluation of HDFC Bank for the financial year ended March 31, 2017.

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39 current accounts scrutinized

Scrutiny of 39 current accounts opened by its customers for bidding in the initial public offer was conducted. The RBI said HDFC Bank failed to exercise ongoing due diligence in those accounts.

“It was observed that the transactions effected in these current accounts were disproportionate to the declared income and profile of the customers.”

After considering the reply received from the bank and oral submissions made in the personal hearing, RBI came to the conclusion that the charge of non-compliance with the direction was sustained and warranted imposition of monetary penalty.

Earlier in 2013, the RBI had imposed fines on three private banks — Axis Bank, HDFC Bank, and ICICI Bank — for violation in KYC norms. The violations related to the arrangement of “at par” payment of cheques drawn by co-operative banks and non-adherence to certain aspects of KYC and anti-money laundering norms.

The RBI had also said that the banks had failed to obtain PAN card details and to verify the source of funds credited to a few non-resident ordinary accounts.

With Agency inputs

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