RBI slaps 10 crore fine on HDFC Bank over irregularities in auto loan book

Published on May 28, 2021 08:25 PM IST

RBI said that it examined documents related to marketing and sale of third-party non-financial products to HDFC’s customers arising from a whistleblower complaint to it in connection with irregularities in the private lender’s auto loan portfolio.

HDFC faces a <span class='webrupee'>₹</span>10 crore fine imposed by the RBI(Reuters)
HDFC faces a 10 crore fine imposed by the RBI(Reuters)
By, Hindustan Times, New Delhi

The Reserve Bank of India (RBI) on Friday announced that it has imposed a 10 crore penalty on HDFC Bank Limited for “contravention of provisions of section 6(2) and section 8 of the Banking Regulation Act, 1949 (the Act)”. The central bank in a statement said that the action was taken based on the deficiencies in regulatory compliance.

“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,” RBI said in the statement.

RBI said that it examined documents related to marketing and sale of third-party non-financial products to HDFC’s customers arising from a whistleblower complaint to it in connection with irregularities in the private lender’s auto loan portfolio. It also said that a notice was issued to HDFC to explain why the penalty shall not be imposed for contravention of the provisions of the act.

“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 whistleblower 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. 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,” the statement also said.

The central bank said that after considering HDFC’s reply to its show-cause notice and oral submissions, it felt that the charges of the contravention were substantial and decided to impose the monetary penalty.

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