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RBI imposes monetary penalty on HDFC Bank for lapses in KYC, interest rate and outsourcing compliance
The Economic Times· 2025-11-28 11:45
Core Viewpoint - The Reserve Bank of India (RBI) has imposed a penalty of ₹91 lakh on HDFC Bank for violations related to the Banking Regulation Act, specifically concerning compliance with interest rates on advances, outsourcing of financial services, and Know Your Customer (KYC) norms [5]. Compliance Violations - HDFC Bank was fined for using multiple benchmarks within the same loan category, which is against regulatory guidelines [3][5]. - A wholly owned subsidiary of HDFC Bank engaged in non-permissible business activities as defined under Section 6 of the Banking Regulation Act [3][5]. - The bank outsourced the KYC compliance checks for certain customers to external agents, which is a compliance issue highlighted by the RBI [3][5]. Regulatory Process - The penalty order was issued on November 18, 2025, following a Statutory Inspection for Supervisory Evaluation that reviewed the bank's position as of March 31, 2024 [2][5]. - The RBI issued a show-cause notice to HDFC Bank based on supervisory findings and reviewed the bank's response before taking action [2][5]. Clarification on Penalty - The RBI clarified that the penalty is focused solely on compliance issues and does not affect the validity of any transactions or agreements made by the bank with its customers [5]. - The penalty is stated to be "without prejudice" to any further actions that may be initiated by the RBI against HDFC Bank [5].
