The Reserve Bank of India (RBI) has imposed a ₹91 lakh penalty on HDFC Bank after uncovering serious lapses in compliance, including violations of KYC norms and key provisions of the Banking Regulation Act.
According to an official RBI statement, the bank failed to meet essential standards for outsourcing financial services, particularly in areas involving risk management and conduct guidelines. The shortcomings in verifying customer identities and inconsistencies in internal procedures triggered the regulatory action.
The findings emerged from an inspection of HDFC Bank’s financial operations as of March 31, 2024. RBI noted that the bank did not adhere strictly to its directions and that the explanation provided in response to the show-cause notice was unsatisfactory.
The regulator also highlighted that HDFC Bank used multiple criteria within the same loan category, and in some instances, outsourced KYC checks to external agencies. Additionally, a wholly owned subsidiary was found to be engaging in activities that violated Section 6 of the Banking Regulation Act.
As India’s second-largest private sector bank, HDFC Bank’s penalty underscores RBI’s ongoing push for stronger compliance, transparency, and customer protection across the banking industry.
