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The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1.91 crore on Axis Bank Limited for contravention of provisions under Section 19(1)(a) of the Banking Regulation Act, 1949, and non-compliance with certain RBI directives related to Interest Rate on Deposits, Know Your Customer (KYC), and Credit Flow to Agriculture – Collateral-Free Agricultural Loans. The penalty has been levied under the powers conferred by Section 47A(1)(c) read with Section 46(4)(i) of the BR Act.
The action follows the Statutory Inspection for Supervisory Evaluation (ISE 2023) conducted by RBI, referencing the bank’s financial position as of March 31, 2023. The inspection also included a review of the activities of the bank’s wholly-owned subsidiary. Findings revealed violations of regulatory provisions and non-compliance with RBI directions, prompting the central bank to issue a show-cause notice to Axis Bank.
After considering the bank’s written and oral submissions, RBI confirmed several charges, including:
Opening certain savings accounts in the name of ineligible entities.
Assigning multiple Customer Identification Codes (CICs) to certain customers instead of issuing a single Unique Customer Identification Code (UCIC).
Obtaining collateral security for agricultural loans of up to ₹1.60 lakh in certain cases, contrary to RBI directives.
Engaging its wholly-owned subsidiary in technology service provision, which is not permissible under Section 6 of the BR Act for a banking company.
RBI clarified that this action is solely related to deficiencies in statutory and regulatory compliance and does not affect the validity of any transactions or agreements entered into by the bank with its customers. The imposition of the penalty is also without prejudice to any other regulatory action that RBI may initiate against the bank.
[RBI]