RBI Imposed Penalty on IndusInd Bank for opening Savings Deposit Accounts in name of Ineligible Entities
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹27.30 lakh on IndusInd Bank Ltd. for failing to comply with certain provisions of the ‘Reserve Bank of India (Interest Rate on Deposits) Directions, 2016’. The penalty, announced on December 18, 2024, was imposed under Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949.
Background of the Penalty
The penalty followed the findings of the Statutory Inspection for Supervisory Evaluation (ISE 2023) conducted by the RBI, which reviewed the bank’s financial position as of March 31, 2023. During this inspection, the RBI identified instances of non-compliance with its directions, particularly regarding the opening of savings deposit accounts in the name of ineligible entities.
Based on these findings, the RBI issued a show-cause notice to IndusInd Bank, asking why a penalty should not be imposed for the violations. The bank was allowed to present its case through written replies, additional submissions, and oral arguments during a personal hearing. After reviewing the submissions, the RBI determined that the violations were substantiated, leading to the monetary penalty.
RBI’s Clarification
The RBI emphasized that the penalty is related solely to deficiencies in regulatory compliance and does not question the validity of any transactions or agreements the bank has entered into with its customers. The action is also without prejudice to any other measures the RBI may take against the bank in the future.
Implications for IndusInd Bank
The penalty underscores the importance of strict adherence to RBI’s regulatory guidelines and serves as a reminder to all banks to maintain compliance to avoid similar actions.
