On March 26, 2025, the Reserve Bank of India (RBI) announced a monetary penalty of ₹75 lakh on HDFC Bank for failing to follow certain regulatory guidelines related to Know Your Customer (KYC) norms. The penalty was imposed under powers granted by the Banking Regulation Act, 1949, for deficiencies found during a supervisory inspection.
Why Was HDFC Bank Penalised?
RBI stated that HDFC Bank did not follow some of its KYC-related directions. The bank failed to categorise certain customers into risk categories—low, medium, or high—based on its own internal assessments. Also, instead of assigning one Unique Customer Identification Code (UCIC) per customer, the bank was found to have issued multiple identification codes to the same customers.
What Did RBI Say in Its Statement?
A Statutory Inspection for Supervisory Evaluation (ISE 2023) was carried out, referring to HDFC Bank’s financial position as of March 31, 2023. After examining the findings and responses from the bank, the RBI concluded that the violations were valid and serious enough to warrant a penalty.
RBI clarified that this action was solely due to deficiencies in regulatory compliance and should not be seen as questioning the legality of any customer transactions or agreements made by the bank.
What Is Section 47A(1)(c) of the Banking Regulation Act?
Under this section, the RBI can penalise banks for failing to follow its directions. In this case, the penalty was imposed under Section 47A(1)(c), read with Section 46(4)(i), for non-compliance with KYC-related norms.
Other Banks Penalised by RBI
Besides HDFC Bank, the RBI also imposed monetary penalties on two other financial institutions:
Punjab & Sind Bank: Fined ₹68.20 lakh for not following rules related to the Central Repository of Large Common Exposures across banks and for not complying with basic banking services under the BSBDA scheme.
KLM Axiva Finvest: Penalised ₹10 lakh for violating RBI norms regarding dividend declaration.
In all cases, RBI stressed that these penalties were for regulatory lapses and not related to the actual services or transactions with customers.
The Reserve Bank of India’s penalty on HDFC Bank serves as a reminder to financial institutions to strictly follow regulatory guidelines, especially those related to customer identification and risk profiling. While the penalty does not affect customer accounts directly, it reflects the importance of KYC compliance in banking operations.
RBI’s actions also show that regulatory lapses, even by top private or public banks, will not be taken lightly. The central bank continues to monitor and enforce rules to maintain financial discipline and trust in the banking system.
