This action is based on the deficiencies in regulatory compliance
The Reserve Bank of India (RBI) has imposed a monetary penalty on ICICI Bank
And Kotak Mahindra Bank, as per the info, released by the RBI on October 17, 2023.
The Reserve Bank of India (RBI) has, by an order dated October 17, 2023, imposed a monetary penalty of Rs.12.19 crore (Rupees Twelve crore and nineteen lakh only) on ICICI Bank Ltd. (the bank) for contravention of sub-section (1) of Section 20 of the Banking Regulation Act, 1949 (the BR Act) read with directions issued by RBI on ‘Loans and Advances-Statutory and Other restrictions', sub-section (2) of Section 6 and Section 8 of the BR Act read with directions issued by the RBI on ‘Financial Services provided by the Banks’, and non-compliance with the RBI directions on ‘Frauds classification and reporting by commercial banks and select Fls’. This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) of the BR Act.
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.
Background
The Statutory Inspections for Supervisory Evaluation (ISE 2020 and ISE 2021) of the bank were conducted by RBI with reference to its financial position as on March 31, 2020 and March 31, 2021. The examination of the Risk Assessment Reports/Inspection Reports pertaining to ISE 2020 and ISE 2021, and all related correspondence in that regard, revealed, inter alia, that the bank had (i) sanctioned/committed loans to companies in which two of its directors were also directors, (ii) marketed and engaged in the sale of non-financial product, and (iii) failed to report frauds to RBI within the prescribed timelines. Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the provisions of the BR Act and the directions issued by RBI, as stated therein.
After considering the bank’s reply to the notice, oral submissions made during the personal hearing and additional submissions made by it, RBI came to the conclusion that the charge of non-compliance with the provisions of the BR Act and the RBI directions was substantiated and warranted imposition of monetary penalty on the bank.
2 The Reserve Bank of India (RBI) has, by an order dated October 17, 2023, imposed a monetary penalty of Rs.3.95 crore (Rupees Three crore Ninety Five lakhs only) on Kotak Mahindra Bank Limited (the bank) for non-compliance with RBI Directions on “Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks”, “Recovery Agents engaged by Banks”, “Customer Service in Banks”, and “‘Loans and Advances - Statutory and Other Restrictions’”. This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of Section 47A(1)(c) read with Sections 46 (4)(i) of the Banking Regulation Act, 1949.
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.
Background
The Statutory Inspection for Supervisory Evaluation (ISE 2022) of the bank was conducted by RBI with reference to its financial position as on March 31, 2022. The examination of certain observations of the Risk Assessment Report/Inspection Report pertaining to ISE 2022, and all related correspondence in that regard revealed, inter alia, non-compliance with the aforesaid directions by the bank to the extent it (i) failed to carry out annual review / due diligence of the service provider, (ii) failed to ensure that customers are not contacted after 7 pm and before 7 am, (iii) levied interest from disbursement due date instead of the actual date of disbursement, contrary to the terms & conditions of sanction, and (iv) levied foreclosure charges despite there being no clause in the loan agreement for levy of prepayment penalty on loans recalled/foreclosure initiated by the bank. Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said direction, as stated therein.
After considering the bank’s reply to the notice, additional information provided by the bank, and the oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank.
