By an order dated 03-09-2024, the Reserve Bank of India (‘RBI’) imposed a penalty of Rs. 1 crore on HDFC Bank Limited (‘HDFC’) for non-compliance with the directions issued by RBI regarding ‘Interest rate on deposits’, ‘Recovery agents engaged by Banks’ and ‘Customer service in banks’ read with the Banking Codes and Standards Board of India (‘BCSBI’) Code and ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’.
Background
A statutory inspection for supervisory evaluation of the financial position of HDFC bank was conducted on 31-03-2022. Based on this, a show cause notice was issued to HDFC bank seeking an answer as to why a penalty should not be imposed for its failure to comply with the above-mentioned directions.
RBI found that the following charges against HDFC bank were sustained:
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HDFC bank gave gifts (in the form of paying first-year premium for the complimentary life insurance cover) costing more than Rs. 250 to the depositors at the time of accepting certain deposits;
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HDFC bank opened certain savings deposit accounts in the name of ineligible entities;
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HDFC failed to ensure that customers are not contacted after 7 PM and before 7 AM.
Further, RBI clarified that the action taken against HDFC bank was not related to the validity of any transaction or agreement entered into by HDFC bank with its customers.
