HDFC Bank Penalised by RBI for Irregular Benchmarking, Subsidiary Operations, and KYC Lapses

On November 18, 2025 the Reserve Bank of India (RBI) issued a penalty order on HDFC Bank Limited for breach of provisions of section 19 (1)(a) read with section 6(1) of the Banking Regulation Act, 1949 and non-compliance with certain directions issued by RBI.

RBI also conducted an investigation for Supervisory Evaluation (ISE 2024) of the bank with reference to its financial position as of March 31, 2024. After checking the bank’s actions, the RBI sent HDFC Bank a formal notice asking it to explain why it shouldn’t be fined for not following the rules mentioned in the Banking Regulation Act and the RBI’s own guidelines.

After considering the bank’s reply to the notice, RBI found that HDFC Bank used more than one benchmark to decide interest rates for the same type of loan, which is not allowed. It also found that one of the bank’s subsidiaries was doing business activities that banks are not permitted to do under the law. In addition, the bank had outsourced some KYC (Know Your Customer) checks to outside agents, which goes against RBI guidelines.

RBI added that this action is being taken because the bank did not follow certain laws and rules. It does not mean that any deals or agreements the bank made with its customers are invalid. Also, this fine does not stop the RBI from taking any other action against the bank in the future. The penalty has been imposed under the provisions of section 47A(1)(c) read with section 46(4)(i) of the RBI Act.