This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Act.
Reserve Bank of India. File pic
Based on deficiencies in regulatory compliance, the Reserve Bank of India (RBI) on Friday imposed a monetary penalty of Rs 10 crore on the HDFC Bank.
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"The Reserve Bank of India has imposed, by an order dated May 27, 2021, a monetary penalty of Rs 10.00 crore (Rupees ten crore only) on HDFC Bank Limited (the bank) for contravention of provisions of section 6(2) and section 8 of the Banking Regulation Act, 1949 (the Act)," read the statement by the RBI.
This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Act, it said.
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The RBI further clarified that the action is based on 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.According to the RBI, an examination of documents in the matter of marketing and sale of third-party non-financial products to the bank's customers, arising from a whistle blower complaint to RBI regarding irregularities in the auto loan portfolio of the bank, revealed, inter alia, contravention of the afore-said provisions of the Act and the regulatory directions.
"In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for contravention of the provisions of the Act/directions. After considering the bank's reply to the show cause notice, oral submissions made during the personal hearing and examination of further clarifications/documents furnished by the bank, RBI came to the conclusion that the aforesaid charge of contravention of provisions of the Act was substantiated and warranted imposition of monetary penalty," the RBI said.
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