RBI slaps ₹10 crore penalty on HDFC Bank

The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹10 crore on HDFC Bank Limited for contravention of provisions of section 6(2) and section 8 of the Banking Regulation Act, 1949 (the Act), an order dated 27 May stated.

This penalty has been imposed in exercise of powers vested in the RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Act, the statement further said.

The central bank said irregularities were found after examination of whistleblower complaint with respect to the bank's auto loan portfolio.

This action is based on 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, it added.

"An examination of documents in the matter of marketing and sale of third-party non-financial products to the bank's customers, arising from a whistle blower complaint to RBI regarding irregularities in the auto loan portfolio of the bank, revealed, inter alia, contravention of the afore-said provisions of the Act and the regulatory directions," the order said.

It added: "In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for contravention of the provisions of the Act/directions."

After considering the bank's reply to the show cause notice, oral submissions made during the personal hearing and examination of further clarifications/documents furnished by the bank, the RBI came to the conclusion that the aforesaid charge of contravention of provisions of the Act was substantiated and warranted imposition of monetary penalty.

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