The Reserve Bank of India on Friday imposed a monetary penalty of Rs 93 lakh on Axis Bank for various violations, including those related to KYC guidelines. The central bank also slapped a fine of Rs 90 lakh on IDBI Bank.
The central bank said that action against Axis Bank has been taken over violation of certain directions issued by the RBI regarding banking services such as loans, levy of penal charges on non-maintenance of minimum balances in savings bank accounts, Know your customer (KYC) services etc.
IDBI Bank, on the other hand, faced penalty for violating regulations related to frauds and cyber security, the central bank said in separate statements.
“This 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,” RBI said in its statement.
The Statutory Inspections for Supervisory Evaluation on both the banks were done by the central bank recently concerning their financial positions as on March 31, 2017, March 31, 2018 and March 31, 2019. The bank also examined the respective Risk Assessment Report, Inspection Report and all related correspondences pertaining to the same.
Action against Axis Bank
RBI found that Axis bank failed to maintain the prescribed margin in case of intraday facilities sanctioned to stockbrokers and also did not follow restrictive practices in the sale of insurance products to customers. It even failed to verify the copy of officially valid documents so produced by the clients, with the originals, while establishing account-based relationships.
RBI even found some customer IDs having multiple CIFs instead of a Unique Customer Identification Code (UCIC), and there has been instances of penal charges being levied for non-maintenance of minimum balance in savings bank accounts, not directly proportionate to the extent of the shortfall observed.
Action against IDBI Bank
Meanwhile, in the case of IDBI Bank, the RBI reported incidents of multiple fraudulent transactions over two days on June 8 and 9, 2019 in the accounts of two corporate net banking customers (Co-operative banks).
The private lender reported the frauds to RBI with delay and there was again a delay in the submission of Flash Reports in respect of frauds involving an amount of Rs 5 crore and above. IDBI also failed to implement time restrictions on holidays and data access control for corporate net banking to put through fund transfer resulting in unauthorised debit transactions in the accounts of two co-operative banks.
