RBI imposes Rs 1 cr penalty each on Kotak Mahindra Bank, IndusInd Bank

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 1.05 crore on Kotak Mahindra Bank Ltd. and Rs 1 crore on IndusInd Bank Ltd. for violating the provisions of its regulations.

RBI, by an order dated June 29, 2022, imposed a monetary penalty on Kotak Mahindra Bank for contravention of the provisions of banking regulations and non-compliance with customer protection guidelines.

As per the banking regulator, It has imposed a penalty on Kotak Mahindra Bank Limited for contravention of the provisions of sub-section (2) of Section 26A of the Banking Regulation Act, 1949 (the Act) read with paragraph 3 of ‘The Depositor Education and Awareness Fund Scheme, 2014’ and for non-compliance with the directions on ‘Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’, and ‘Loans and Advances – Statutory and Other Restrictions.

The RBI has also penalised IndusInd Bank for non-compliance with certain directions issued by RBI on ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016’.

RBI’s these penalties are based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, it noted.

The central bank added that “the statutory inspection for supervisory evaluation of the banks was conducted by RBI with reference to its financial positions as on March 31, 2018 and March 31, 2019.”