The Reserve Bank of India (RBI) has taken action against two major private sector banks, HDFC Bank and Axis Bank, imposing penalties for their failure to comply with various regulations.
HDFC Bank, the country’s leading private sector bank, has been fined a hefty ₹ 1.91 crore. The central bank’s investigation, conducted on March 31, 2022, revealed that the bank had violated several directives regarding interest rates on deposits, recovery agents engaged by banks, and customer service standards.
The RBI specifically cited HDFC Bank’s practice of offering gifts exceeding ₹ 250 crore to depositors, a violation of its guidelines. Additionally, the bank was found to have opened savings accounts for ineligible entities and failed to adhere to regulations regarding customer contact times, prohibiting calls before 7 a.m. and after 7 p.m.
Meanwhile, Axis Bank has been penalized with a ₹ 1 crore fine for violating specific provisions of the Banking Regulation Act, 1949, and for non-compliance with the RBI’s directives regarding interest rates on deposits, know your customer (KYC) procedures, and credit flow to the agriculture sector for collateral-free agricultural loans.
The RBI’s statutory inspection of Axis Bank’s financial position, conducted on March 31, 2023, identified several irregularities. The bank was found to have opened savings accounts for ineligible entities and assigned multiple customer identification codes to certain customers, contradicting the requirement for a unique customer identification code (UCIC).
Furthermore, Axis Bank was found to have obtained collateral security for agricultural loans exceeding ₹ 1.60 lakh in some cases. Additionally, one of its wholly-owned subsidiaries took over the business of a service provider, a practice prohibited by the RBI.
It’s worth noting that HDFC Bank reported a 2% drop in net profit to ₹ 16,175 crore for the April-June quarter of fiscal year 2024-25 (Q1FY25). These penalties, coupled with the decline in profit, highlight the importance of strict compliance with regulatory directives for banks operating in India.
