RBI slaps penalties on ICICI Bank, KMB for violating norms
The Reserve Bank on Tuesday imposed monetary penalty of Rs 12.19 crore on ICICI Bank and Rs 3.95 crore on Kotak Mahindra Bank for violating various norms.
The central bank said it conduced statutory inspection of ICICI Bank in 2020 and 2021 which revealed that the lender had sanctioned or committed loans to companies in which two of its directors were also directors.
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“Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the provisions of the BR Act,” the Reserve Bank said, adding that basis the responses received from the bank, the imposition of penalty was warranted.
The action on ICICI Bank, however, 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, the RBI said.
Kotak Mahindra Bank, meanwhile, was penalised for failing to carry out annual review or due diligence of its service provider. Separately, it also failed to ensure that its customers are not contacted after 7 pm and before 7 am, in contravention of the appointment and ethics of RBI’s recovery agents norm.
The RBI found that Kotak Mahindra Bank levied interest from disbursement due date instead of the actual date of disbursement, contrary to the terms and conditions of sanction. The lender also levied foreclosure charges despite there being no clause in the loan agreement for levy of prepayment penalty on loans recalled by the bank.