Reserve Bank of India has imposed a penalty of Rs 1 crore on HDFC Bank for non-compliance with Know Your Customer (KYC) norms. Supervisory evaluation of the bank (2016-17) revealed that the HDFC Bank had “failed to exercise ongoing due diligence” with regards to 39 current accounts opened by its customers for bidding in Initial Public Offer.
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The RBI had issued a notice to the bank to show cause as to why penalty should not be imposed for non-compliance with the direction. It was observed that the transactions effected in these current accounts were disproportionate to the declared income and profile of the customers. RBI came to the conclusion that imposition of monetary penalty was warranted.