17-Nov-2023
2 mins read
The Reserve Bank of India (RBI) has levied a significant fine of Rs 90.92 lakh on Axis Bank Ltd. This measure is in reaction to the bank’s non-compliance with several RBI directives, particularly in areas concerning customer identification and behaviour in the outsourcing of financial services.
Areas of Non-Compliance
Axis Bank was found lacking in several key areas:
- KYC Regulations: In certain instances, the bank did not properly maintain records related to customer identification and addresses.
- Conduct with Customers: Persistent calls were made to some customers, and the bank failed to ensure the proper behaviour of recovery agents with delinquent borrowers.
- Recording and Declarations: There was a lack of tape recording of calls made by recovery agents, and the bank did not obtain necessary declarations when opening current accounts.
RBI’s Assessment and Response
The RBI’s decision follows a thorough examination of various reports and correspondence, including the Risk Assessment Report/Inspection Report of ISE 2022. After reviewing Axis Bank’s response to a show-cause notice and considering oral and additional submissions, the RBI concluded that these non-compliance issues were substantial and merited a monetary penalty.
Implications of the Penalty
This penalty, enforced under the provisions of the Banking Regulation Act 1949, aims to address deficiencies in regulatory compliance. The RBI clarified that this action does not question the validity of any transactions or agreements the bank has with its customers.
The penalty levied on Axis Bank acts as a stark reminder of the crucial need for strict compliance with regulatory standards and the repercussions of non-adherence. This move by the RBI highlights its dedication to upholding integrity and regulatory compliance in India’s banking industry.