The penalty has been imposed after examining a complaint by a whistleblower regarding irregularities in the auto loan portfolio of the lender.
The Reserve Bank has imposed a penalty of Rs 10 crore on HDFC Bank for deficiencies in regulatory compliances with regard to its auto loan portfolio. The penalty has been slapped after examining a complaint by a whistleblower regarding irregularities in the auto loan portfolio of the lender. The order imposing the fine was issued on May 27. In a statement on Friday, the Reserve Bank of India (RBI) said it has imposed a monetary penalty of Rs 10 crore on HDFC Bank for contraventions of certain provisions of the Banking Regulation Act, 1949.
The apex bank said an examination of documents in the matter of marketing and sale of third-party non-financial products to the bank’s customers, arising from a whistleblower complaint to it regarding irregularities in the auto loan portfolio of the bank, revealed contravention of the provisions of the Act and the regulatory directions. In furtherance to the same, RBI said a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for the contraventions.
After considering the bank’s reply to the show cause notice, oral submissions made during the personal hearing and examination of further clarifications/ documents furnished by the bank, RBI came to the conclusion that the contraventions were “substantiated and warranted imposition of monetary penalty”, the statement said.
RBI also made it clear that the action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by HDFC Bank with its customers.