RBI Imposes ₹2.5 Crore Penalty on 5 Banks for Rule Violations

The Reserve Bank of India (RBI) has fined 5 major Indian banks a total of ₹2.5 crore for failing to follow its regulatory rules. The action was taken after the central bank found problems in areas like cybersecurity, KYC (Know Your Customer) procedures, and customer service. The affected banks are ICICI Bank, Axis Bank, Bank of Baroda, IDBI Bank, and Bank of Maharashtra.

ICICI Bank Fined the Most

ICICI Bank received the highest penalty of ₹97.8 lakh. The RBI said the bank failed to report a cybersecurity incident quickly and didn’t have a proper alert system for certain accounts. It also charged late fees on credit cards without sending statements to customers.

Axis Bank and Bank of Maharashtra Also Penalised

Axis Bank was fined ₹29.6 lakh. The bank was found using internal office accounts to process transactions that were not authorised, violating RBI rules.

Bank of Maharashtra had to pay ₹31.8 lakh in penalties for two reasons: opening many savings accounts using Aadhaar-based e-KYC without following guidelines and overcharging interest on some Kisan Credit Card loans. This went against the government’s Interest Subvention Scheme, which aims to give farmers loans at lower rates.

Bank of Baroda and IDBI Bank Fined Too

Bank of Baroda was fined ₹61.4 lakh. The RBI found the bank did not regularly credit interest on frozen or inactive savings accounts. Also, it allowed insurance companies to give non-cash rewards to employees who sold insurance, which is against the rules.

IDBI Bank also faced a fine, although it was smaller, related to earlier non-compliance with KYC norms.

How RBI Took Action

The penalties came after the RBI conducted a detailed inspection of the banks’ operations through the Statutory Inspection for Supervisory Evaluation (ISE). Before imposing the fines, RBI sent show-cause notices, and carefully reviewed the banks’ written and oral replies.

Conclusion

These penalties are meant to push banks to follow rules more strictly. The RBI made it clear that these actions will not affect customers’ accounts or transactions.

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