RBI imposes Penalty on HDFC Bank, Multiple Violations Revealed in RBI Inspection
| Get instant news updates: Click here to join our Whatsapp Group |
The Reserve Bank of India (RBI) has imposed a Rs.91 lakh penalty on HDFC Bank after identifying several regulatory violations during its latest inspection. The order, issued on 18 November 2025, highlights gaps in the bank’s adherence to the Banking Regulation Act, 1949, and non-compliance with important RBI guidelines.
Why RBI imposed penalty on HDFC Bank?
RBI conducted its Statutory Inspection for Supervisory Evaluation (ISE 2024) based on HDFC Bank’s financials as of 31 March 2024. During the review, RBI found instances where the bank had not followed mandatory rules, particularly relating to:
- Interest rate guidelines on loans
- Outsourcing of financial services
- Know Your Customer (KYC) requirements
- Permissible business activities under the Banking Regulation Act
HDFC Bank was issued a notice and asked to explain the violations. After examining the bank’s reply and additional submissions, RBI concluded that the breaches were valid and required a monetary penalty.
Major Violations Identified
RBI pointed out three specific issues:
1. Multiple Loan Benchmarks in the Same Category
The bank was found using different benchmark rates for loans within the same category, which goes against RBI’s rules for consistency and transparency in lending.
2. Subsidiary Engaged in Non-Permissible Business
A wholly owned subsidiary of HDFC Bank undertook activities not permitted under Section 6 of the Banking Regulation Act, a clear violation of what a banking company is legally allowed to do.
3. Outsourcing of KYC Compliance
The bank outsourced the function of checking KYC compliance for certain customers to external agents. RBI strictly prohibits outsourcing core compliance functions that directly impact customer verification and security.
RBI clarified that this action is solely related to regulatory lapses and does not question any individual customer transaction or agreement. The penalty only reflects deficiencies found in the bank’s internal processes.
