RBI Slaps Rs1.91 Crore Penalty on Axis Bank for Violating KYC Norms and Improper Loan Practices
Moneylife Digital Team 11 September 2024
The Reserve Bank of India (RBI) has imposed a penalty of Rs1.91 crore on Axis Bank Ltd for contravention of provisions of section 19 (1) (a) of the Banking Regulation Act (BR Act) and non-compliance with directions on the interest rate on deposits, know-your-customer (KYC) norms and credit flow to collateral free agricultural loans.
 
In a release, RBI says that the penalty was imposed after identifying that Axis Bank had opened certain savings accounts in the name of ineligible entities. Additionally, multiple customer identification codes were allotted to certain customers, rather than assigning a unique customer identification code (UCIC) for each customer, as required. 
 
Furthermore, Axis Bank had obtained collateral security for agricultural loans up to Rs1.60 lakh in certain cases, which is against the norms. 
 
Also, a wholly-owned subsidiary of Axis Bank was found to be engaged in the business of providing technology services, a business activity that is not permitted for a banking company under Section 6 of the BR Act.
 
After considering the facts of the case and the Bank’s reply, RBI concluded that the violations were substantiated and warranted the imposition of a penalty.
 
This action is based on the 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.
 
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