RBI slaps Rs 1-crore penalty each on KMB, IndusInd

The Reserve Bank of India (RBI) on Monday said it has imposed monetary penalties on Kotak Mahindra Bank and IndusInd Bank for failing to comply with various regulations.

Kotak Mahindra Bank was fined Rs 1.05 crore for non-compliance with directions on limiting liability of customers in unauthorised electronic banking transactions, and statutory and other restrictions governing loans and advances.

The RBI imposed the fine on the bank after conducting statutory inspection with reference to its financial positions as on March 31, 2018 and March 31, 2019. The examination revealed that in certain instances of unauthorised transactions, the bank had failed to credit the eligible amount to the depositor education and awareness fund within the period prescribed and to credit the amount involved in the transactions to the customers’ account within 10 working days from the date of notification by the customer. Kotak Mahindra Bank was also found to have not maintained or applied margin on advances to stock brokers.

IndusInd Bank was fined Rs 1 crore for not following KYC directions. A statutory inspection of the bank with reference to its financial position as on March 31, 2020 revealed that the bank had failed to adhere to the customer due diligence procedure in the accounts opened using one time password (OTP)-based e-KYC, in the non-face-to-face mode. In some accounts, the aggregate of all credits in a financial year, in all the deposits taken together, exceeded Rs 2 lakh, and some fixed deposit accounts were opened for amounts exceeding Rs 1 lakh, of which some deposits were for more than Rs 2 lakh.

Both banks were issued notices asking them to show cause as to why penalties should not be imposed on them. After considering the banks’ replies, oral submissions made during personal hearings and examination of additional submissions made by them, the RBI came to the conclusion that the charges of non-compliance were substantiated and warranted imposition of fines.

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