Excerpt from The Hindu Business Line Article – Published on Oct 17, 2023
The Reserve Bank of India (RBI) has imposed monetary penalties on ICICI Bank and Kotak Mahindra, citing serious lapses in regulatory compliance. ICICI Bank faces a ₹12.19 crore penalty for various violations, including granting loans to companies where two of its directors held positions, involvement in the sale of non-financial products, and delays in reporting frauds to the RBI. This penalty comes amid ongoing scrutiny of ICICI Bank’s alleged violation of lending policies in sanctioning a ₹1,875 crore loan to the Videocon Group.
Kotak Mahindra Bank (KMB) has been fined ₹3.95 crore for failing to conduct an annual review and due diligence of service providers, contacting customers outside permissible hours, and mischarging interest contrary to sanction terms. The RBI highlighted additional non-compliance issues, such as levying foreclosure charges without a contractual basis.
ICICI Bank’s penalty follows its previous encounter with the RBI in March 2018, when it faced a ₹58.9 crore penalty for non-compliance related to the direct sale of securities. For KMB, the RBI pointed out breaches in various directions, including those related to outsourcing, recovery agents, customer service, and statutory restrictions on loans and advances.
The RBI clarified that its actions are rooted in deficiencies in regulatory compliance and do not challenge the validity of specific transactions or agreements. Last year, the RBI imposed penalties totaling ₹12.17 crore on seven private sector banks. These actions underscore the central bank’s commitment to upholding regulatory standards within the banking sector.
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