RBI imposes heavy fines on ICICI bank and Yes bank for regulatory violations
RBI imposes heavy fines on ICICI bank and Yes bank for regulatory violations
The Reserve Bank of India (RBI) has imposed significant penalties on ICICI Bank and Yes Bank for non-compliance with regulatory directives. ICICI Bank has been fined Rs 1 crore, while Yes Bank faces a penalty of Rs 91 lakh.
The RBI’s inspection of ICICI Bank for the financial year 2022 revealed that the bank had granted term loans to certain entities as substitutes for budgetary resources allocated for specific projects.
These actions violated the RBI’s guidelines on ‘Loans and Advances – Statutory and Other Restrictions’. ICICI Bank failed to conduct adequate due diligence to ensure the feasibility and sustainability of these projects, particularly regarding whether the revenue generated would be sufficient to service the debt. Furthermore, the bank used budgetary resources for loan repayment without verifying that these funds were designated for monitorable projects.
In a parallel move, the RBI fined Yes Bank Rs 91 lakh on May 17 for breaching regulations related to ‘Customer Service in Banks’ and ‘Un-Authorised Operation of Internal/Office Accounts’. The inspection of Yes Bank for the fiscal year 2022 found that the bank had imposed penalties on accounts with insufficient or zero balance and had opened and utilized internal accounts in the name of customers for unauthorized purposes, including parking funds and processing customer transactions.
These penalties underscore the RBI’s commitment to ensuring compliance with regulatory norms and safeguarding the integrity of the banking sector. Both banks are expected to take corrective measures to address these violations and prevent future occurrences.
