Team Blitz India
NEW DELHI: The Reserve Bank on India has announced penalties on ICICI Bank and Kotak Mahindra Bank for violating its regulations.
While Kotak Mahindra Bank Limited was fined Rs 3.95 crore, the ICICI Bank Ltd. was fined Rs 12.19 crore, according to RBI statement. Kotak Mahindra Bank was fined for failure to adhere to RBI directions, including the code of conduct for outsourcing financial services, handling recovery agents, maintaining customer service standards, etc.
RBI’s statutory inspection revealed several instances of non-compliance by the bank, such as failing to conduct annual reviews of service providers, contacting customers outside permitted hours, and wrongly charging interest and other charges.
The central bank, in its statement, also underscored that KMB levied interest from the disbursement due date instead of the actual date of disbursement, contrary to the terms and conditions of sanction, and levied foreclosure charges despite there being no clause in the loan agreement for the levy of a prepayment penalty on loans recalled/foreclosure initiated by the bank.
The ICICI Bank Ltd. was fined for incorrectly sanctioning loans and failing to report fraud to RBI within the prescribed timelines. The violations include the bank sanctioned loans to companies in which two of its directors were also directors, marketed and engaged in the sale of non-financial product, and failed to report fraud to RBI within the prescribed timelines, according to RBI.
The RBI’s decision followed a review of the banks’ responses to notices and additional information provided.
