HDFC Bank Slapped With Rs 1-crore Penalty

The Reserve Bank of India (RBI) has imposed a ₹1-crore penalty on private sector lender HDFC Bank for non-compliance with directions on ‘Know Your Customer/Anti-Money Laundering norms and on reporting of frauds.

“The penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949, taking into account failure of the bank to adhere to the aforesaid directions issued by RBI,” the central bank said on Tuesday, adding that the action is based on deficiencies in regulatory compliance. The issue pertains to a reference to the RBI from customs authorities regarding submission of forged bill of entries (BoEs) by certain importers for remittance of foreign currency.

Further examination revealed violations of directions on ‘KYC/AML norms’ and on reporting of frauds, after which a notice was issued to HDFC Bank advising it to show cause as to why monetary penalty should not be imposed for non-compliance with RBI norms.

“After considering the bank’s reply, oral submissions made during the personal hearing and additional submissions, the RBI came to the conclusion that the charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty,” it said.

“The bank has taken necessary measures to strengthen its internal control mechanisms so as to ensure that such incidents do not recur,” HDFC Bank said in a regulatory filing. HDFC Bank shares remained largely stable and closed at ₹2,416.80 apiece on the BSE.