The Reserve Bank of India on Wednesday imposed Rs one crore monetary penalty on HDFC Bank for non-compliance with Know Your Customer (KYC) norms. The RBI in a release said that supervisory evaluation of the bank (2016-17) revealed that the HDFC Bank had "failed to exercise ongoing due diligence" with regards to 39 current accounts opened by its customers for bidding in Initial Public Offer.
"It was observed that the transactions effected in these current accounts were disproportionate to the declared income and profile of the customers," it said.
"The penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with section 46 (4) (i) of the Banking Regulation Act 1949, taking into account the failure of the bank to adhere to the aforesaid direction issued by RBI," said the central bank in a statement.
The RBI had issued a notice to the bank to show cause as to why penalty should not be imposed for non-compliance with the direction.
After considering the reply received from the bank and oral submissions made in the personal hearing, the RBI came to the conclusion that imposition of monetary penalty was warranted, the release said.
It further said the 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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