RBI fines HDFC Bank & Punjab and Sindh Bank for regulatory violation

The Reserve Bank of India (RBI) has fined the public sector bank, Punjab and Sindh Bank, and the private sector bank, HDFC Bank, for violating various regulatory provisions. HDFC Bank was fined Rs 75 lakhs, and the Punjab and Sindh Bank Rs 68.20 lakhs.

The fines were imposed on these banks by the RBI, exercising its power under the Banking Regulation Act 1949.

The Banking Regulation Act 1949 makes the RBI the regulator of banks in India.

HDFC Bank violated the KYC regulation

India's largest private sector bank, HDFC Bank, was fined for its non-compliance with certain directions issued by the RBI on Know Your Customer (KYC).

• According to the RBI, the bank failed to categorise certain customers into low, medium, or high risk categories.
• According to RBI  rules, the banks have to classify their customers based on their transactions and the bank’s risk perception into low risk, medium-risk, and high-risk customers and monitor the bank accounts of these customers accordingly.
• HDFC was also found guilty of allotting multiple customer identification codes to certain customers instead of a Unique Customer Identification Code (UCIC) for each customer.

Punjab and Sindh Bank's failure to comply with CRILC and BSBDA

RBI fined Punjab and Sindh Bank for Its non-compliance with its directives on CRILC (‘Central Repository of Information on Large Credits) and the guidelines on the Basic Savings Bank Deposit Account (BSBDA)

• The bank was found guilty of not reporting certain borrowers with non-fund-based exposure of Rs 5 crore and above to CRILC.
• The Bank was found guilty of allowing certain BSBDA holders to open Savings Bank Deposit Accounts.
• According to the RBI, a person cannot open a BSBDA account along with a savings account in a bank.

About HDFC Bank 

HDFC Bank started its banking operation in 1995 as a private bank. 

It was sponsored by the Housing Development Finance Corporation Limited, or HDFC Ltd, which later merged with the HDFC Bank in July 2023.

 It is India’s largest private-sector bank and second-largest commercial bank after SBI.

MD & CEO of the Bank : Sashidhar Jagdishan

Headquarters: Mumbai 

Tagline of the Bank: We Understand Your World

Punjab and Sindh Bank 

It was set up as a private bank in 1908 in Amritsar.

It was nationalised by the government of India in 1980.

Headquarters: New Delhi

Tagline: Where Service is a way of life 

 MD and CEO: Swarup Kumar Saha 

Governor of RBI: Sanjay Kumar Malhotra 

Also Read: Sanjay Malhotra Appointed 26th Governor of RBI