RBI imposes Rs 75 lakh penalty on HDFC Bank for KYC failures

The Reserve Bank of India (RBI) has fined HDFC Bank, the largest private lender in the country, Rs 75 lakh for failing to adhere to the guidelines outlined in the RBI’s Know Your Customer (KYC) master direction, as per an official statement released on Wednesday.

After considering HDFC Bank's reply to a showcause notice for violation of norms and additional submissions made by it, THE RBI found, inter alia, that the charges against the bank were sustained, warranting imposition of monetary penalty.

The RBI found that the bank did not categorise certain customers into low, medium or high risk category based on its assessment and risk perception.

The bank also allotted multiple customer identification codes to certain customers instead of a Unique Customer ldentification Code (UCIC) for each customer, the RBI statement said. The statutory inspection of the bank was conducted by RBI concerning its financial position as on March 31, 2023.

Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions, according to the RBI statement.

The RBI said that this action is based on 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. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

HDFC Bank reported a 2.2 per cent year-on-year growth in standalone net profit for Q3FY25 at Rs 16,736 crore. On a sequential basis, the net profit was marginally lower than the corresponding figure of Rs 16,821 crore in Q2FY25.

The bank's interest earned increased 7.6 per cent year-on-year to Rs 76,007 crore, while interest expenses rose 7.7 per cent to Rs 45,354 crore during the quarter.