The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹75 lakh on HDFC Bank, the country’s largest private sector lender, for non-compliance with specific provisions of its Know Your Customer (KYC) guidelines.
In a regulatory statement issued on Tuesday, the central bank cited deficiencies in HDFC Bank’s customer due diligence processes. Specifically, the bank was found to have failed to properly classify certain customers based on risk categories – low, medium, or high. Furthermore, RBI noted that the bank had issued multiple unique customer identification codes (UCICs) to individual clients, violating the regulatory framework that mandates a single UCIC per customer.
The penalty was levied following supervisory inspection of HDFC Bank’s financial position as on March 31, 2023. RBI clarified that the action is based on regulatory compliance failures and does not reflect upon the validity of any transaction or agreement entered into by the bank with its customers.
HDFC Bank has yet to issue a public response regarding the matter.
In a separate action, the RBI also fined non-banking financial company (NBFC) KLM Axiva Finvest ₹10 lakh for violating dividend declaration norms under the “NBFC – Scale Based Regulation Directions, 2023.” The central bank found that the NBFC had announced dividends for FY 2023–24 despite not meeting the prescribed minimum regulatory capital requirements in the preceding three financial years.
These penalties underline RBI’s continued push for stringent adherence to compliance and risk management practices, especially in light of rising concerns around financial transparency and customer protection in the Indian banking and NBFC sectors.
As financial institutions come under increasing scrutiny, analysts suggest these regulatory moves serve as a reminder to lenders to tighten internal controls and align rigorously with RBI’s evolving compliance landscape.
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