RBI imposes monetary fines on Kotak Mahindra Bank and ICICI Bank

The Reserve Bank of India (RBI) on Tuesday (October 17) has taken action against two leading banks, Kotak Mahindra Bank and ICICI Bank, imposing monetary penalties for their regulatory non-compliance. Kotak Mahindra Bank was fined ₹3.95 crore for failing to adhere to RBI's guidelines on various aspects, including the ‘Managing risks and code of conduct in outsourcing of financial services by banks,’ ‘Recovery agents engaged by banks,’ ‘Customer service in banks,’ and ‘Loans and advances — statutory and other restrictions.’

RBI's decision was based on the findings from a Statutory Inspection for Supervisory Evaluation (ISE 2022), which exposed several areas of non-compliance. These included the bank's neglect in conducting annual reviews of its service providers, contacting customers beyond permissible hours, and discrepancies in the application of interest and foreclosure charges. In a separate move, RBI also levied a ₹12.19-crore penalty on ICICI Bank Ltd for contravening Section 20 of the Banking Regulation Act, 1949, in conjunction with various directions on loans and advances, financial services, and fraud classification and reporting. These two penalties have been imposed in the exercise of powers vested in RBI conferred under the provisions of Section 47A(1)(c) of the Banking Regulation Act, 1949.