The Reserve Bank of India imposed fines on private banks ICICI Bank and Yes Bank because of their non-compliance.
A fine of Rs 1 crore was imposed by RBI on ICICI Bank as it failed to comply with regulations related to ‘Loans and Advances – Statutory and Other Restrictions’.
RBI’s inspection of ICICI Bank for FY22 showed that the bank had provided term loans to certain entities as replacements for budgetary resources for certain projects.
ICICI Bank failed to do its due diligence thoroughly to evaluate the projects’ feasibility and sustainability and make sure that the generated revenue would be enough to meet the debt servicing requirements.
The loans were repaid with the help of budgetary resources without verifying that the funds were allocated for projects that could be effectively monitored.
The RBI also imposed a fine of Rs 91 lakh on Yes Bank for the violation of regulations related to the ‘Unauthorized Operation of Internal/Office Accounts’ and ‘Customer Service in Banks’.
During FY22, Yes Bank was inspected by RBI and found to have penalized accounts with low or no balances as well as established and used internal accounts in customers’ names for unauthorized purposes, such as processing transactions and parking funds.