RBI imposes Monetary Penalty on Axis Bank Ltd

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs.90.92 Lakh on Axis Bank Ltd. (the bank) for non-compliance with certain directions issued by RBI on ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016’, ‘Loans and Advances – Statutory and Other Restrictions’, ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’ and ‘Code of Conduct for Opening and Operating Current Accounts’.

The RBI conducted a Statutory Inspection for Supervisory Evaluation (ISE 2022) of the bank based on its financial situation as of March 31, 2022. The RBI also examined an account.

The examination of the Risk Assessment Report/Inspection Report pertaining to ISE 2022, Scrutiny Report and all related correspondence in that regard, revealed, inter alia, that the bank (i) failed to preserve records pertaining to the identification of customers and their address in certain cases, (ii) made persistent calls to some of the customers, (iii) failed to ensure appropriate behaviour of recovery agents with some of the delinquent borrowers and (iv) failed to ensure a tape recording of the content/text of the calls made by the recovery agents to some of the customers and (v) did not obtain declarations from the customer at the time of opening of current accounts.

As a result, a notice was sent to the bank, directing it to show cause why a penalty should not be imposed on it for failing to comply with the RBI’s orders, as indicated therein.

After analysing the bank’s response to the notice, oral representations made during the personal hearing, and additional submissions made by it, the RBI concluded that the aforementioned charge of non-compliance was proven and deserved monetary penalty imposition.

This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) of the Banking Regulation Act, 1949.

This action is based on the 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.