The Reserve Bank of India (RBI) on Tuesday imposed a penalty of Rs 1 crore on private sector lender HDFC Bank for non-compliance of Know Your Customer (KYC) norms and anti-money laundering norms, and for failure to report frauds.
The central bank, however, said that the action was based on deficiencies in regulatory compliance and not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
"The penalty has been imposed in exercise of powers vested under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949, taking into account failure of the bank to adhere to the aforesaid directions issued by RBI," the central bank said in a press release.
The apex bank said it had received a reference from customs authorities regarding submission of forged bill of entries (BoEs) by certain importers to the bank for remittance of foreign currency.
"Examination in this regard revealed violations of RBI directions on 'KYC/AML norms' and on reporting of frauds based on which a notice was issued to the bank advising it to show cause as to why monetary penalty should not be imposed for non-compliance with the aforesaid directions," it added.
RBI said that it considered the bank's reply, oral submissions made during the personal hearing and additional submission made by the bank after the personal hearing, following which it concluded that the aforesaid charges of non-compliance with directions were substantiated and warranted imposition of monetary penalty.