RBI Imposes penalty of Rs 75 lakh on HDFC Financial institution for violating buyer KYC instructions, ETCFO
The Reserve Financial institution of India (RBI) has discovered HDFC Financial institution didn’t adjust to sure instructions talked about within the RBI’s Know Your Buyer (KYC) grasp route and therefore imposed a financial penalty of Rs 75 lakh on the financial institution. It’s noteworthy that the KYC grasp round being referred to by the RBI was issued on February 25, 2016 and has been final up to date on November 6, 2024.
“The Reserve Financial institution of India (RBI) has, by an order dated March 24, 2025, imposed a financial penalty of ₹75.00 lakh (Rupees Seventy 5 Lakh solely) on HDFC Financial institution Restricted (the financial institution) for non-compliance with sure instructions issued by RBI on ‘Know Your Buyer (KYC)’. This penalty has been imposed in train of powers conferred on RBI below the provisions of Part 47A(1)(c) learn with Part 46(4)(i) of the Banking Regulation Act, 1949,” mentioned the RBI in a press launch dated March 26, 2025.
Which floor stage apply of HDFC Financial institution violated RBI’s KYC Grasp round?
In response to the RBI’s press launch listed here are the chain of occasions:
Statutory Inspection
RBI mentioned within the press launch: “A Statutory Inspection for Supervisory Analysis (ISE 2023) of the financial institution was carried out close to its monetary place as on March 31, 2023.”
Inspection discovered non-compliance
RBI mentioned within the press launch: “Primarily based on supervisory findings of non-compliance with RBI instructions and associated correspondence in that regard, a discover was issued to the financial institution advising it to indicate trigger as to why penalty shouldn’t be imposed on it for its failure to adjust to the mentioned instructions.”
HDFC Financial institution’s reply to the RBI present trigger discover did not fulfill the RBI
RBI mentioned within the press launch: “After contemplating the financial institution’s reply to the discover and extra submissions made by it, RBI discovered, inter alia, that the next prices towards the financial institution had been sustained, warranting imposition of financial penalty:
- The financial institution didn’t categorise sure prospects into low, medium or excessive threat class primarily based on its evaluation and threat notion; and
- The financial institution allotted a number of buyer identification code to sure prospects as a substitute of a Distinctive Buyer Identification Code (UCIC) for every buyer.
“This motion is predicated on deficiencies in regulatory compliance and isn’t meant to pronounce upon the validity of any transaction or settlement entered into by the financial institution with its prospects. Additional, imposition of financial penalty is with out prejudice to some other motion that could be initiated by RBI towards the financial institution,” mentioned the RBI.We’ve got despatched e mail to HDFC Financial institution asking about their assertion. The story will likely be up to date as and when the financial institution sends the reply.
