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HIGHLIGHTS:

  • RBI has been invested with the powers to impose such penalties by the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Act
  • They justified their action stating that they found lopsidedness after they examined a whistleblower’s complaint about the bank’s auto loan portfolio
  • The above mentioned action of imposing monetary compensation was concluded upon by the RBI after a thorough examination of the bank’s response
  • This doesn’t determine the rationale behind any transaction or agreement the bank might have made its customers

HDFC Bank Limited has been fined a monetary penalty of Rs 10 crores by the Reserve Bank of India (RBI) for infringing the provisions of section 6(2) and 8 of the Banking Regulation Act, 1949 (the Act). The same was affirmed in an order issued on May 27th, 2021.

The order stated that RBI has been invested with the powers to impose such penalties by the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Act. They justified their action stating that they found lopsidedness after they examined a whistleblower’s complaint about the bank’s auto loan portfolio.

It further asserted that this doesn’t determine the rationale behind any transaction or agreement the bank might have made its customers.

“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 aforesaid provisions of the Act and the regulatory directions,” the order read.

“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,” it added.

The above mentioned action of imposing monetary compensation was concluded upon by the RBI after a thorough examination of the bank’s response to the show-cause notice, verbal statements made during the hearing and other clarification submitted before them.

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