These actions are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, July 11, 2025: The Reserve Bank of India (RBI) has, by separate orders in July 2025; imposed monetary penalties on one private bank and one NBFC. RBI has imposed monetary penalty on the HDFC Bank and the Shriram Finance. These actions against both the entities, are based on deficiencies in regulatory compliance.
1 The Reserve Bank of India has imposed a monetary penalty of Rs4.88 lakh (Rupees Four Lakh, Eighty-Eight Thousand only) on HDFC Bank Ltd. in exercise of powers vested in the Reserve Bank under the provisions of Section 11(3) of FEMA, 1999, for contravention of Paragraph 9.3.6 of ‘Master Direction – Foreign Investment in India’ dated January 04, 2018, while granting a term loan to its client.
The Reserve Bank of India had issued a Show Cause Notice to the bank, in response to which the bank had submitted a written reply and had also made oral submissions thereon. After considering the facts of the case and the response given by HDFC Bank Ltd. in the matter, the Reserve Bank of India came to the conclusion that the contraventions were established and warranted imposition of penalty.
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.
2 The Reserve Bank of India (RBI) has, by an order dated July 08, 2025, imposed a monetary penalty of Rs2.70 lakh (Rupees Two Lakh Seventy Thousand only) on Shriram Finance Limited (the company) for non-compliance with certain provisions of the “Reserve Bank of India (Digital Lending) Directions, 2025” issued by RBI. This penalty has been imposed in exercise of powers conferred on RBI under clause (b) of sub-section (1) of Section 58G read with clause (aa) of sub-section (5) of Section 58B of the Reserve Bank of India Act, 1934.
The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2024. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.
After considering the company’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found, inter alia, that the following charge against the company was sustained, warranting imposition of monetary penalty:
The company routed the loan repayments through the account of a third-party, instead of the borrowers directly crediting the loan repayments to the company’s account.
This 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 company with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the company.
