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