RBI slaps Rs 12.19 crore penalty on ICICI Bank for non-compliance

According to the RBI, the penalty on ICICI Bank was imposed for non-compliance with the RBI directions on ‘Frauds classification and reporting by commercial banks and select Fls’ under the Banking Regulation Act, 1949. “This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers,” the RBI said.

The examination of the risk assessment reports and inspection reports pertaining to 2020 and 2021, and all related correspondence in that regard, revealed that ICICI Bank had sanctioned/ committed loans to companies in which two of its directors were also directors, marketed and engaged in the sale of non-financial product and failed to report frauds to the RBI within the prescribed timelines, the RBI said.

Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the provisions of the BR Act and the directions issued by the RBI. The RBI came to the conclusion that the charge of non-compliance with the provisions of the BR Act and the RBI directions was substantiated and warranted imposition of monetary penalty on the bank, the regulator said.

On Kotak Mahindra Bank, the RBI said the bank failed to carry out annual review/ due diligence of the service provider, failed to ensure that customers are not contacted after 7 pm and before 7 am, levied interest from disbursement due date instead of the actual date of disbursement, contrary to the terms & conditions of sanction and levied foreclosure charges despite there being no clause in the loan agreement for levy of prepayment penalty on loans recalled/foreclosure initiated by the bank.

However, the RBI did not release the full orders pertaining to ICICI Bank and Kotak Mahindra violations.

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