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RBI imposes Rs 25 lakh fine on Axis Bank for non-compliance with KYC directions

RBI imposes Rs 25 lakh fine on Axis Bank for non-compliance with KYC directions

A scrutiny was carried out by RBI during February 2020 and March 2020 in a customer account maintained with Axis Bank, and it was found that the bank failed to comply with the KYC directions issued by the central bank

RBI said it has imposed the penalty in exercise of powers vested in it under the Banking Regulation Act, 1949 RBI said it has imposed the penalty in exercise of powers vested in it under the Banking Regulation Act, 1949

The Reserve Bank of India (RBI) on Wednesday imposed a monetary penalty of Rs 25 lakh on Axis Bank Ltd for non-compliance with certain provisions of directions issued by the central bank about Know Your Customer (KYC).

A scrutiny was carried out by RBI during February 2020 and March 2020 in a customer account maintained with Axis Bank, and it was found that the bank failed to comply with the KYC directions issued by the central bank.

"...the bank failed to monitor/carry out on-going due diligence in the said account to ensure that the transactions were consistent with its knowledge about the customer, customer's business and risk profile," the RBI said in a release.
 
The central bank had issued a notice to Axis Bank, advising it to show cause why penalty should not be imposed on it for contravention of the said directions.

"After considering the bank's reply to the notice and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of contravention of/non-compliance with the aforesaid RBI directions were substantiated and warranted imposition of monetary penalty, to the extent of non-compliance with the aforesaid direction," it said.

RBI said it has imposed the penalty in exercise of powers vested in it under the Banking Regulation Act, 1949.  It clarified that the action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

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