RBI Imposes Rs 1 Crore Penalty Each on Kotak Mahindra Bank, IndusInd Bank
Moneylife Digital Team 05 July 2022
The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs1.05 crore on Kotak Mahindra Bank and Rs1 crore on IndusInd Bank for violating the provisions of its regulations.
Kotak Mahindra Bank was fined for non-compliance with directions on limiting liability of customers in unauthorised electronic banking transactions, and statutory and other restrictions governing loans and advances, while IndusInd Bank was penalised for not following KYC (know-your-customer) directions.
In an order issued on Monday, the banking regulator imposed a monetary penalty on Kotak Mahindra Bank for contravention of the provisions of banking regulations and non-compliance with customer protection guidelines.
As per the banking regulator, RBI has imposed a penalty on Kotak Mahindra Bank for contravention of the provisions of sub-section (2) of Section 26A of the Banking Regulation Act, 1949 (the Act) read with paragraph 3 of ‘The Depositor Education and Awareness Fund Scheme, 2014’ and for non-compliance with the directions on ‘Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’, and ‘Loans and Advances – Statutory and Other Restrictions.
The RBI has also penalised IndusInd Bank for non-compliance with certain directions issued by RBI on ‘Reserve Bank of India KYC Directions, 2016’.
Both banks were issued notices asking them to show cause why penalties should not be imposed on them.
RBI stressed that these penalties are based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, it noted.
The central bank added that “the statutory inspection for supervisory evaluation of the banks was conducted by RBI with reference to its financial positions as on 31 March 2018 and 31 March 2019.”
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