MUMBAI: The RBI has imposed a record fine of nearly Rs 12.2 crore on ICICI Bank for violating credit rules and delays in reporting fraud. The fine on ICICI Bank is higher than the Rs 10 crore fine imposed on HDFC Bank in May 2021 for irregularities in auto loans. The fine is also higher than the total fines imposed on private banks in FY23, which total Rs 12.17 crore.
RBI inspected ICICI Bank’s books in 2020 and 2021 to assess its financial status. During the inspection, RBI found that the bank had extended loans to companies where two directors of the lender held board positions. violation of RBI guidelines. The bank also marketed and sold non-financial products, which are outside the purview of a commercial bank.
Third, ICICI Bank did not report fraud to RBI in a timely manner. After discovering these irregularities, RBI sent a notice to the bank.
“After considering the bank’s response to the notice, the oral submissions made during the personal hearing and the bank’s additional submissions, RBI came to the conclusion that the allegation of non-compliance with the provisions of the Banking Regulation Act and the RBI guidelines was justified and justified the imposition of monetary penalty on the bank,” the central bank said.
The regulator has also fined Kotak Mahindra Bank nearly Rs 4 crore for violating rules on risk management, outsourcing, recovery agents and loan management.
RBI inspected Kotak Bank’s financial position as of March 2022. The regulator found several irregularities: The bank has not assessed or monitored the activities of its service providers. The bank had also violated RBI guidelines that customers should not be contacted after 7 pm and before 7 am for loan recovery.
Another violation of consumer protection norms was charging interest from the date of loan approval instead of the date of actual disbursement, which violates the loan terms. It was found that the private bank imposed early repayment penalties on small borrowers, even though the terms of the loan did not provide for such penalties.
After following due procedure of issuing show-cause notice to Kotak Bank, RBI decided that the allegations of non-compliance with RBI guidelines were substantiated and warranted imposition of penalty on the bank.
RBI inspected ICICI Bank’s books in 2020 and 2021 to assess its financial status. During the inspection, RBI found that the bank had extended loans to companies where two directors of the lender held board positions. violation of RBI guidelines. The bank also marketed and sold non-financial products, which are outside the purview of a commercial bank.
Third, ICICI Bank did not report fraud to RBI in a timely manner. After discovering these irregularities, RBI sent a notice to the bank.
“After considering the bank’s response to the notice, the oral submissions made during the personal hearing and the bank’s additional submissions, RBI came to the conclusion that the allegation of non-compliance with the provisions of the Banking Regulation Act and the RBI guidelines was justified and justified the imposition of monetary penalty on the bank,” the central bank said.
The regulator has also fined Kotak Mahindra Bank nearly Rs 4 crore for violating rules on risk management, outsourcing, recovery agents and loan management.
RBI inspected Kotak Bank’s financial position as of March 2022. The regulator found several irregularities: The bank has not assessed or monitored the activities of its service providers. The bank had also violated RBI guidelines that customers should not be contacted after 7 pm and before 7 am for loan recovery.
Another violation of consumer protection norms was charging interest from the date of loan approval instead of the date of actual disbursement, which violates the loan terms. It was found that the private bank imposed early repayment penalties on small borrowers, even though the terms of the loan did not provide for such penalties.
After following due procedure of issuing show-cause notice to Kotak Bank, RBI decided that the allegations of non-compliance with RBI guidelines were substantiated and warranted imposition of penalty on the bank.
ADVERTISEMENT
