In a significant move, the Reserve Bank of India (RBI) has imposed a hefty monetary penalty of ₹12.19 crore on ICICI Bank Ltd., as of October 17, 2023. This action comes as a result of the bank’s contravention of various sections of the Banking Regulation Act, 1949 (BR Act) along with the RBI’s directives related to loans and advances, financial services, and fraud classification and reporting by commercial banks and select Financial Institutions (FIs). The monetary penalty has been imposed under the powers granted to RBI through the provisions of Section 47 A(1)(c) and Section 46(4)(i) of the BR Act.
It’s crucial to note that this regulatory action is centered on deficiencies in regulatory compliance and is not an assessment of the validity of any transactions or agreements between the bank and its customers.
Background
The Statutory Inspections for Supervisory Evaluation (ISE) were conducted in 2020 and 2021 by RBI, with reference to the bank’s financial position as of March 31, 2020 and March 31, 2021. During the examination of the Risk Assessment Reports and Inspection Reports pertaining to these inspections, as well as related correspondence, it was discovered that the bank had engaged in several non-compliant activities. This included sanctioning loans to companies where two of its directors were also directors, marketing and selling non-financial products, and failing to report frauds to RBI within the prescribed timelines.
As a response to these findings, RBI issued a notice to ICICI Bank, requesting the bank to provide reasons why a penalty should not be imposed for its failure to adhere to the provisions of the BR Act and RBI’s directives.
Following a detailed review of the bank’s response to the notice, oral submissions made during the personal hearing, and additional submissions, RBI concluded that the charges of non-compliance with the provisions of the BR Act and RBI’s directives were well-founded, justifying the imposition of the monetary penalty.
