Key Points
- RBI has imposed monetary penalties on five major banks, including ICICI Bank, Bank of Baroda, Bank of Maharashtra, IDBI Bank, and Axis Bank, for various regulatory compliance failures.
- ICICI Bank received the highest penalty of ₹97.80 lakh for lapses in cybersecurity, KYC norms, and improper credit card billing practices.
- Other banks were fined for issues ranging from customer service lapses and KYC violations to improper interest charges on agricultural loans.
- RBI clarified that these penalties address compliance deficiencies, not the validity of customer transactions.
- Separately, an RBI working group has recommended extending call money market trading hours to 7 PM, while keeping forex and government securities market timings unchanged.
New Delhi: The Reserve Bank of India (RBI) has taken strict action against several leading banks, imposing hefty monetary penalties for a range of regulatory compliance violations. The move underscores RBI’s commitment to enforcing robust standards in cybersecurity, customer service, and financial operations across the banking sector.
ICICI Bank Fined for Cybersecurity and KYC Lapses
ICICI Bank, one of India’s largest private sector lenders, was hit with the highest penalty of ₹97.80 lakh. RBI cited multiple lapses, including:
- Failure to report a cybersecurity incident within the stipulated timeline.
- Lack of robust software to generate alerts for certain categories of accounts.
- Failure to send credit card bills or statements to some customers while still levying late payment charges.
- Non-compliance with Know Your Customer (KYC) norms and guidelines for credit and debit card issuance and conduct.
Penalties on Other Banks
- Bank of Baroda: Fined ₹61.40 lakh for failing to ensure proper customer service, not crediting interest in dormant or frozen savings accounts at prescribed intervals, and allowing non-cash incentives to staff involved in insurance distribution.
- Bank of Maharashtra: Penalized ₹31.80 lakh for KYC regulation violations, particularly in accounts opened via Aadhaar OTP-based e-KYC in non-face-to-face mode.
- IDBI Bank: Fined ₹31.80 lakh for charging excess interest on certain Kisan Credit Card (KCC) accounts, violating the interest subvention scheme for short-term agricultural loans.
- Axis Bank: Penalized ₹29.60 lakh for unauthorized operations in internal or office accounts.
RBI emphasized that these penalties are based solely on regulatory deficiencies and do not question the validity of any customer transaction or agreement.
RBI Working Group Recommends Longer Money Market Hours
In a separate development, an RBI-appointed working group has proposed extending the trading hours of the call money market from the current 5 PM to 7 PM. This move is aimed at providing banks with greater flexibility in managing liquidity and responding to real-time payment system demands.
- Call Money Market: Proposed trading until 7 PM, with reporting windows extended to 7:30 PM.
- Market Repo and TREP: Suggested extension of trading hours to 4 PM.
- Forex and Government Securities Markets: No change in existing trading hours, with the forex market remaining open from 9 AM to 3:30 PM and government securities trading from 9 AM to 5 PM.
These recommendations reflect the evolving landscape of India’s financial markets and the need for operational flexibility as digital and global integration deepens.
RBI’s latest enforcement actions send a strong message on regulatory compliance, with major banks facing significant fines for lapses in cybersecurity, KYC, and customer service. Meanwhile, proposed changes to money market timings aim to boost liquidity management and operational efficiency in the banking sector.
