RBI Imposes Rs 75 Lakh Penalty on HDFC Bank for Regulatory Breach
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Synopsis
On March 26, the Reserve Bank of India (RBI) fined HDFC Bank Rs 75 lakh for non-compliance with KYC regulations. The bank failed to properly categorize customers and assign unique identification codes. Despite this, HDFC Bank reported solid profit growth in Q3FY25.
Key Takeaways
- RBI fined HDFC Bank Rs 75 lakh for KYC violations.
- Bank failed to categorize customers by risk.
- Multiple codes assigned to some customers instead of UCIC.
- Inspection conducted as of March 31, 2023.
- HDFC Bank reported a 2.2% profit growth in Q3FY25.
Mumbai, March 26 (NationPress) The Reserve Bank of India (RBI) has levied a fine of Rs 75 lakh on HDFC Bank, recognized as the largest private sector bank in the nation, for failing to adhere to the RBI’s Know Your Customer (KYC) master directive, as stated in an official announcement released on Wednesday.
Upon reviewing HDFC Bank's response to a showcause notice concerning the breach of regulations and additional information submitted by the bank, the RBI determined that the allegations against the bank were substantiated, necessitating the enforcement of a financial penalty.
The RBI identified that the bank failed to classify certain customers into low, medium, or high-risk categories based on its evaluation and risk perception.
Additionally, the bank assigned multiple customer identification codes to some customers instead of a Unique Customer Identification Code (UCIC) for each individual, as noted in the RBI statement.
A statutory inspection of the bank was carried out by the RBI concerning its financial status as of March 31, 2023. Following supervisory findings of non-adherence to RBI directives and related communications, a notice was issued to the bank requesting an explanation as to why penalties should not be imposed for its failure to comply with these directives, according to the RBI statement.
The RBI stated that this action arises from deficiencies in regulatory compliance and does not aim to comment on the legitimacy of any transaction or agreement made by the bank with its customers. Furthermore, the imposition of the financial penalty does not preclude any other measures that may be initiated by the RBI against the bank.
HDFC Bank reported a 2.2 percent year-over-year increase in standalone net profit for Q3FY25, amounting to Rs 16,736 crore. On a sequential basis, the net profit was slightly lower than the corresponding figure of Rs 16,821 crore in Q2FY25.
The bank’s interest income rose 7.6 percent year-on-year, reaching Rs 76,007 crore, while interest expenses increased 7.7 percent to Rs 45,354 crore during the quarter.
