Reserve Bank of India (RBI) on Friday imposed a penalty of Rs 10 crore on HDFC Bank Limited. The banking regulator took this drastic action on the private sector lender “for contravention of provisions of section 6(2) and section 8 of the Banking Regulation Act, 1949 (the Act),” the banking regulator said in a statement.
“This action is based on deficiencies in regulatory compliance,” RBI said, adding the penalty “is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.”
“An examination of documents in the matter of marketing and sale of third-party non-financial products to the bank’s customers, arising from a whistle blower complaint to RBI regarding irregularities in the auto loan portfolio of the bank, revealed, inter alia, contravention of the afore-said provisions of the Act and the regulatory directions,” RBI said.
The notice was issued to the bank advising it to show cause as to why penalty should not be imposed for contravention of the provisions of the Act/directions, RBI said.
“After considering the bank’s reply to the show cause notice, oral submissions made during the personal hearing and examination of further clarifications/ documents furnished by the bank, RBI came to the conclusion that the aforesaid charge of contravention of provisions of the Act was substantiated and warranted imposition of monetary penalty,” the regulator said.