RBI imposes penalty on Axis Bank, IDBI Bank

Reserve Bank has imposed a monetary fine of 93 lakh more on Axis Bank 90 lakhs on IDBI Bank.

Shares of Axis Bank closed with gains of 0.5% on Friday 796.10 on NSE, while IDBI Bank shares closed 0.21% down 47.65

In the case of Axis Bank, RBI has imposed monetary penalty for non-compliance of directions issued by RBI on loans and advances, KYC guidelines and penalty on maintenance of minimum balance in savings accounts.

RBI said Axis Bank has violated certain norms by not maintaining the prescribed margin in respect of intraday facilities extended to stock brokers.

“The bank also followed restrictive practices in the sale of insurance products to customers, failed to verify the copy of officially valid documents produced by the customers, with the original, while establishing an account based relationship, instead of multiple customer IDs. There were instances of CIF having a Unique Customer Identification Code (UCIC), and levying penal charges for maintenance of minimum balance in savings bank accounts, which is not directly proportional to the extent of shortfall,” the RBI said.

In the case of IDBI Bank, the RBI said that the lender reported the fraud with a delay and submitted a flash report regarding the fraud which included the amount RBI failed to implement time restrictions and data access control for corporate net banking through fund transfers with delays of Rs 5 crore and above, resulting in unauthorized debit transactions in the accounts of two co-operative banks.

RBI had issued notices to both the banks advising them to show cause as to why penalty should not be imposed on them for non-compliance of the directions.

After considering the banks’ response to the notices and oral submissions, RBI came to the conclusion that the allegations of non-compliance with the directions were substantiated and warranted imposition of monetary penalty.

RBI said the action is based on 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.

IDBI Bank said in a statement, it has taken necessary corrective action to strengthen its internal control mechanism to ensure that such incidents do not recur.