The Reserve Bank of India (RBI) has imposed Rs 1-crore fine on HDFC Bank for violating know-your-customer (KYC) norms in 39 accounts, which were used for bidding in initial public offering (IPO). Transactions carried out through these accounts were found to be disproportionate to the declared income of the customers.
Based on the observations made during the on-site inspection for supervisory evaluation of HDFC Bank for 2016-2017, the RBI carried out a scrutiny of 39 current accounts opened by the bank’s customers. The scrutiny revealed, among others, that HDFC Bank had failed to exercise ongoing due diligence in those current accounts.
“It was observed that the transactions through these current accounts were disproportionate to the declared income and profile of the customers,” the RBI said.
A show-cause notice was issued to HDFC Bank to reply as to why penalty should not be imposed for non-compliance.
“After considering the reply received from the bank and oral submissions made in the personal hearing, RBI came to the conclusion that the aforesaid charge of non-compliance with the direction was sustained and warranted imposition of monetary penalty,” the RBI statement said.
The fine has been imposed taking into account the failure of the bank to adhere to the RBI’s KYC directive dated February 25, 2016. “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,” the RBI said.
Earlier in 2013, the RBI had imposed fines on three private banks — Axis Bank, HDFC Bank and ICICI Bank — for violation in KYC norms. The violations related to arrangement of ?at par? payment of cheques drawn by co-operative banks and non-adherence to certain aspects of KYC and anti-money laundering norms.
The RBI had also said that the banks had failed to obtain PAN card details and to verify the source of funds credited to a few non-resident ordinary accounts.