RBI imposes monetary penalty on HDFC Bank for lapses in KYC, interest rate and outsourcing compliance
New Delhi, Nov 28, 2025
Synopsis
The Reserve Bank of India has levied a Rs 91 lakh penalty on HDFC Bank for violating banking regulations. The violations include using multiple benchmarks for loans, a subsidiary engaging in non-permitted business, and outsourcing KYC compliance checks. These actions followed a supervisory inspection and a show-cause notice.
The Reserve Bank of India (RBI) on Friday said it has imposed a penalty of Rs 91 lakh on HDFC Bank Limited for violating provisions of the Banking Regulation Act, 1949, and for not complying with RBI directions on interest rates on advances, outsourcing of financial services and Know Your Customer (KYC) norms.
The bank has been fined because it used multiple benchmarks for the same loan category, allowed a subsidiary to carry out non-permitted business and outsourced KYC compliance checks to external agents, the RBI said.
The penalty order was issued on November 18, 2025, under Section 47A(1)(c) read with Section 46(4)(i) of the Act.
The action follows the Statutory Inspection for Supervisory Evaluation, which reviewed the bank’s position as on March 31, 2024. Based on the supervisory findings, the RBI issued a show-cause notice to HDFC Bank and examined the response and additional submissions before taking action.
"The bank had adopted multiple benchmarks within the same loan category,” according to the RBI order. The regulator further stated that “a wholly owned subsidiary of the bank undertook business which is not a permissible business that can be undertaken by a banking company under Section 6 of the BR Act.” It also recorded that “the bank had outsourced the function of determining compliance with KYC norms of certain customers to its outsourcing agents.”
The central bank, however, clarified that the penalty is focused only on compliance issues and not on customer transactions.
The order said the action “is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.” It added that the penalty is “without prejudice to any other action that may be initiated by RBI against the bank.”
[The Economic Times]
