RBI imposes monetary penalty on HDFC Bank for lapses in KYC, interest rate and outsourcing compliance

Economic Times
Economic Times
2w ago • 14 views
The Reserve Bank of India has imposed a Rs 91 lakh penalty on HDFC Bank for multiple regulatory violations, including KYC compliance issues. This action highlights the importance of adherence to banking regulations.
RBI imposes monetary penalty on HDFC Bank for lapses in KYC, interest rate and outsourcing compliance
A What happened
The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 91 lakh on HDFC Bank for several regulatory violations. These include the use of multiple benchmarks for the same loan category, allowing a subsidiary to conduct non-permitted business, and outsourcing Know Your Customer (KYC) compliance checks to external agents. The penalty was issued on November 18, 2025, following a supervisory inspection that reviewed the bank's compliance as of March 31, 2024. The RBI had previously issued a show-cause notice to HDFC Bank, which was examined before the penalty was finalized. The RBI emphasized that the penalty is strictly related to compliance issues and does not question the validity of any transactions made by the bank with its customers.
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Key insights

  • 1

    Regulatory Compliance Importance: The penalty underscores the need for strict adherence to banking regulations.

  • 2

    KYC Compliance Issues: Outsourcing KYC checks raises concerns about customer verification processes.

  • 3

    Multiple Loan Benchmarks: Using various benchmarks for loans can lead to inconsistencies in lending practices.

Takeaways

The RBI's penalty on HDFC Bank serves as a reminder for financial institutions to maintain compliance with regulations to ensure trust and integrity in the banking system.

Topics

Business & Markets Economy World & Politics Policy & Regulation