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RBI imposes Monetary Penalties on ICICI Bank and YES Bank for Rule Violations


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The Reserve Bank of India (RBI) announced on May 27 that it has penalized ICICI Bank and YES Bank for violating regulations. ICICI Bank has been fined Rs 1 crore, while YES Bank has been fined Rs 91 lakh, according to a press release.

ICICI Bank was penalized because it had approved term loans for certain entities without conducting proper due diligence to ensure the viability and bankability of the projects. These loans were given in place of or to substitute budgetary resources allocated for specific projects. The bank did not adequately assess whether the revenue generated by these projects would be sufficient to service the debt. Additionally, the repayment and servicing of these loans were made using budgetary resources without ensuring that the funding proposals were for specific monitorable projects.

YES Bank, on the other hand, was penalized for levying charges on savings accounts with insufficient or zero balance, in violation of the minimum balance requirements. The bank was also found to have opened and operated internal accounts in the names of its customers for unauthorized purposes, such as parking funds and routing customer transactions.

The RBI’s penalties aim to ensure that banks adhere to regulations and maintain the integrity of the financial system.

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