The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 75 lakh on HDFC Bank Limited for non-compliance with its Know Your Customer (KYC) guidelines. The order, dated March 24, 2025, was issued under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949. This action underscores RBI’s commitment to enforcing stringent regulatory norms in the banking sector.
Supervisory evaluation and findings
The Statutory Inspection for Supervisory Evaluation (ISE 2023) was conducted with reference to HDFC Bank’s financial position as of March 31, 2023. Based on supervisory findings indicating non-compliance with RBI directions, the bank was issued a notice to show cause as to why a penalty should not be imposed.
Key non-compliance issues
Upon reviewing HDFC Bank’s response and additional submissions, RBI identified two critical areas of non-compliance:
Risk categorisation failure: The bank failed to categorise certain customers into low, medium, or high-risk categories based on risk perception.
Multiple customer identification codes: HDFC Bank allotted multiple customer identification codes to certain customers instead of maintaining a Unique Customer Identification Code (UCIC) for each.
Clarification on penalty
RBI clarified that this monetary penalty is specifically related to deficiencies in regulatory compliance and does not reflect the validity of any transactions or agreements entered into by the bank with its customers. Additionally, the penalty is without prejudice to any other action that may be initiated by RBI against HDFC Bank.
