The Reserve Bank of India (RBI) has imposed INR120 million (USD1 million) and INR40 million in penalties on ICICI Bank and Kotak Mahindra Bank, respectively, for violating regulatory norms. The penalties were levied as part of the RBI’s ongoing efforts to maintain the integrity and stability of India’s banking system, and are a significant development.
ICICI Bank, one of India’s leading private sector banks, was penalised over findings from the RBI’s risk assessment report. It found the bank had sanctioned loans to companies in which two of its directors were also directors, marketed and engaged in the sale of non-financial products, and failed to report fraud to the RBI within the prescribed timelines.
In the case of Kotak Mahindra Bank, another prominent private sector bank in India, the RBI’s risk assessment report found the bank failed to carry out annual review/due diligence of the service provider, failed to ensure that customers were not contacted after 7pm and before 7am, and levied interest from the disbursement due date instead of the actual date of disbursement, which were contrary to the terms and conditions of the sanction. Consequently, the bank has been served with a monetary penalty as well.
Both ICICI Bank and Kotak Mahindra Bank acknowledged the penalties and expressed their commitment to co-operating with the regulator.