Which two banks have been fined by the Reserve Bank of India (RBI) due to regulatory non-compliance in September 2024?

Correct option is C

​The correct answer is (c) HDFC and Axis Bank

Explanation:

In September 2024, the Reserve Bank of India (RBI) imposed fines on HDFC Bank and Axis Bank for non-compliance with regulatory guidelines.

1. Axis Bank was fined ₹1.91 crore for:
• Violations related to savings accounts being opened for ineligible entities.
• Failure to issue Unique Customer Identification Codes (UCIC).
• Mismanagement of collateral-free agricultural loans up to ₹1.60 lakh.
• Engagement of a subsidiary in technology services is not allowed for banking institutions.
2. HDFC Bank was fined ₹1 crore for:
• Offering gifts exceeding ₹250 to customers who deposited money in the bank.
• Failing to ensure that customers were not contacted after 7 PM and before 7 AM.
• Opening savings accounts for entities that were not eligible under the existing rules.

These penalties show the RBI's commitment to ensuring that financial institutions adhere strictly to regulations to maintain transparency, efficiency, and protect consumers.

Information Booster:

Know Your Customer (KYC)

• Definition: KYC is a process used by financial and non-financial institutions to verify the authenticity and identity of their customers.
• Mandatory Requirement: KYC is required before opening a bank account or investing in financial instruments like mutual funds, insurance, or retirement savings.
• Challenges: Separate KYCs for different financial products can be cumbersome, requiring multiple updates and specifications that deter new investors.

Central KYC Records Registry (CKYCR)

• Launch: Launched by the Indian government in 2016 to simplify KYC across financial assets.
• Purpose: To eliminate the need for repeated KYC processes for customers dealing in securities markets.
• Scope: Initially limited to capital markets, customers only need to complete KYC once with a Sebi-registered intermediary (e.g., broker, depository participant, or mutual fund).
• Registry: Managed by CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest of India).
• Function: CKYCR stores, safeguards, and retrieves KYC records in a secure electronic format.

Process:

• Submission: Customers submit KYC details once to any reporting entity (RBI, Sebi, IRDAI, PFRDA) while opening an account.
• KYC ID: A 14-digit KYC Identification Number is provided, which can be used across financial institutions registered with CERSAI.
• Updates: Any changes to customer details trigger a centralized KYC update by the reporting entity.