RBI Penalises ICICI Bank and YES Bank for Regulatory Violations
Moneylife Digital Team 28 May 2024
Reserve Bank of India (RBI) has imposed a penalty of Rs1 crore on ICICI Bank Ltd and Rs91 lakh on Yes Bank Ltd for non-compliance with the directions issued by the banking regulator.
 
ICICI Bank has been penalised for non-compliance with directions issued by RBI on loans and advances – statutory and other restrictions.
 
RBI's statutory inspection revealed that ICICI Bank had sanctioned term loan(s) to certain entities in lieu of or to substitute budgetary resources envisaged for certain projects and without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were sufficient to take care of the debt-servicing obligations.
 
Further, the repayment or servicing of these loans was made out of budgetary resources, without ensuring that the funding proposals were for specific monitorable projects, the release added.
 
Yes Bank was penalised for non-compliance with RBI directions on customer service in banks and unauthorised operation of internal or office accounts. RBI inspection found out that the bank had levied charges for non-maintenance of minimum balance in certain savings accounts having insufficient or zero balance and opened and operated certain internal accounts in the name of its customers for unauthorised purposes like parking funds and routing customer transactions.
 
"After considering the reply and oral submissions of both the banks during the personal hearing, RBI concluded that the charges of non-compliance with directions were substantiated and warranted imposition of monetary penalty," the central bank says.
 
In both cases, RBI says the penalties are based on deficiencies in regulatory compliance and are not intended to be pronounced on the validity of any transaction or agreement they entered into with their customer.
Comments
s5rwav
2 months ago
The Team of Moneylife has been doing Extra Ordinary Work on Financial Literacy; on Consumer Issues; on RTI Issues and on Corporate Governance for Decades together which needs to be continued in Larger Public Good WITHOUT GETTING DISHEARTENED as being in Public Domain some Vested Interest may Unjustifiably Criticize also.
cjninan
2 months ago
I really request money control to take this issue with RBI. Why should the penality be borne by the Institution and its shareholders. The individuals who did the mistake are free. Penalities on co op bank, again the same issue, the owners are penalised. At least RBI should ensure that the concerned department head or some one in the bank is accountable and should be asked to leave. If not this will only continue as there is no accountability. Both Yes Bank and Icici Bank are public shareholding company. The shareholders are paying for their mistakes.
sucheta
Replied to cjninan comment 2 months ago
We feel a little disheartened with our readers call us Money Control - which belongs to the Mukesh Ambani group, and as far as we know, does not take up any issues with government on behalf of investors, depositors or consumers. If our readers do not even remember our name, what is the chance that they will share our work with others so that we are strengthened and have a greater voice? We can keep taking up issues, but it also requires support from those who read and benefit from our non-partisan work. It is bad enough that we are constantly attacked by paid digital armies of corporates that we expose.
cjninan
Replied to sucheta comment 2 months ago
Madam, My sincere apologies. I understand and fully take responsibility for the mistake. It was a sincere mistake. Once again apologies.
s5rwav
Replied to sucheta comment 2 months ago
The Team of Moneylife has been doing Extra Ordinary Work on Financial Literacy; on Consumer Issues; on RTI Issues and on Corporate Governance for Decades together which needs to be continued in Larger Public Good WITHOUT GETTING DISHEARTENED as being in Public Domain some Vested Interest may Unjustifiably Criticize also.
Jitendra B Parmar
2 months ago
Yes Bank Management had indulged in violation of RBI Regulation in the past and was rescued by the Government and PSU Banks. But it seems that still they are working as per their own style, may be having too much support from the powerfull politicians.
s5rwav
2 months ago
For the Irregularities Committed by the Board of Directors of the ICICI Bank Limited, RBI has Penalised the ICICI Bank Limited. This Penalty cannot be Paid by the Investors of the ICICI Bank Limited. Board of Directors of the ICICI Bank Limited Must Pay the Penalty of Rs One Crore from their Own Pocket and ROC, MCA, Govt of India, Ahmedabad Must Ensure it.
cjninan
Replied to s5rwav comment 2 months ago
Exactly - Why should the shareholders/investors bear the burnt. Let it come out of the salary of the individuals or the Bank should take disciplinary action i.e sack them or bonus or allowance should not be given. This is crazy. Someone makes the mistake and someone else is paying for the same.
hari.bansal55
Replied to cjninan comment 2 months ago
I feel that Money Life is doing wonderful work for protecting interest of public at large. As regards to irregularities committed by ICICI Bank and penalty imposed by RBI, all stakeholders of ICICI Bank should appreciate RBI for taking punitive action against said Bank but matter should not end here only. At the same time RBI should initiate action Authority who sanctioned proposal with such deficiency and also Board members. i fail to understand why such news is not in public domain and reported to NSE for information of shareholders / traders.
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