The Reserve Bank of India has imposed a penalty of ₹1 crore on HDFC Bank for non-compliance of master directions of KYC directions.

“...the RBI has... imposed a monetary penalty of ₹1 crore on the bank for failure to undertake on‐going due diligence in the case of 39 current accounts opened for bidding in Initial Public Offer,” HDFC Bank said in a regulatory filing on Wednesday.

“Based on the observations made during the on-site Inspection for Supervisory Evaluation of HDFC Bank undertaken by the RBI for 2016-17, a scrutiny of 39 current accounts opened by its customers for bidding in IPO was conducted by central bank, which revealed, inter alia, that the bank had failed to exercise ongoing due diligence in those accounts,” the RBI said in a statement, adding that it was observed that the transactions effected in these current accounts were disproportionate to the declared income and profile of the customers.

HDFC Bank was then issued a show cause notice as to why it should not be penalised. After considering the reply received from the bank and oral submissions made in the personal hearing, RBI came to the conclusion that the charge of non-compliance with the direction was sustained and warranted imposition of monetary penalty.

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