KYC breach: RBI imposes penalty of Rs 1 crore on HDFC Bank

Reserve Bank of India (RBI) has imposed a penalty of Rs 1 crore on HDFC Bank for non-compliance of norms related to Know Your Customer (KYC).

According to the press release on the central bank’s website, RBI had conducted an on-site inspection of supervisory evaluation of HDFC in the financial year 2016-17, of 39 current accounts, opened by its customers for bidding in Initial Public Offering (IPO). Based on the inspection, the central bank observed that the transactions of those accounts were disproportionate to the profile of customers as well as the income declared by them.

RBI then issued show cause notice as to why penalty should not be imposed for non-compliance with the direction and HDFC had sent a reply to the bank regarding this. Based on its reply as well as the oral submissions of the personal hearing, RBI sustained that the non-compliance warranted imposition of monetary penalty.

As per the reports, RBI imposed the penalty in exercise of powers under the provisions of section 47 A (1) c read with section 46 (4) i of the Banking Regulation Act 1949. It further stated that the 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.

At 10.13 am on Thursday, the stock of HDFC Bank is trading at Rs 1,224.90, down by 0.89 per cent against its previous close of Rs 1,235.95 on BSE.