The Reserve Bank of India (RBI) on Thursday imposed a penalty of Rs 90.92 lakh on Axis Bank for non-compliance with its certain directions. The RBI has also slapped a fine of Rs 42.78 lakh on Manappuram Finance Ltd.
“The Reserve Bank of India (RBI) has, by an order dated November 02, 2023, imposed a monetary penalty of Rs 90.92 lakh on Axis Bank Ltd for non-compliance with certain directions issued by RBI on ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016’, ‘Loans and Advances – Statutory and Other Restrictions’, ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’ and ‘Code of Conduct for Opening and Operating Current Accounts’,” the RBI said in a statement.
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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, the RBI added.
The RBI conducted the Statutory Inspection for Supervisory Evaluation (ISE 2022) of Axis Bank was conducted by the RBI with reference to its financial position as of March 31, 2022. A scrutiny was also conducted by the RBI involving an account.
The examination revealed that “the bank (i) failed to preserve records pertaining to the identification of customers and their address in certain cases, (ii) made persistent calls to some of the customers, (iii) failed to ensure appropriate behaviour of recovery agents with some of the delinquent borrowers and (iv) failed to ensure a tape recording of the content/text of the calls made by the recovery agents to some of the customers and (v) did not obtain declarations from the customer at the time of opening of current accounts.”
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Following this, the RBI sent a notice to Axis Bank advising it to show cause as to why a penalty should not be imposed on it for failure to comply with the directions issued by RBI.
“After considering the bank’s reply to the notice, oral submissions made during the personal hearing and additional submissions made by it, RBI came to the conclusion that the aforementioned charge of non-compliance was substantiated and warranted imposition of monetary penalty,” it said.
Meanwhile, on the penalty on Manappuram Finance Ltd, the RBI in a statement said it has slapped a fine of Rs 42.78 lakh “for non-compliance with certain provisions of the ‘Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016′”.
The statutory inspection of Manappuram Finance was conducted by RBI with reference to its financial position as on March 31, 2022.
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The RBI said the examination revealed “the company’s failure to comply with the RBI’s directions on payment to certain borrowers the surplus amounts realised by auction of gold articles pledged by those borrowers during the period from April 01, 2021 to September 30, 2022”.
Consequently, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for failure to comply with the RBI directions.
“After considering the company’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions were substantiated and warranted imposition of monetary penalty,” the RBI said.
