The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹90.92 lakh on Axis Bank Ltd for non-compliance with specific directives issued by the central bank. The penalty, issued on November 02, 2023, is based on deficiencies in regulatory compliance and falls under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) of the Banking Regulation Act, 1949.
Background and Regulatory Inspection
The action follows the Statutory Inspection for Supervisory Evaluation (ISE 2022), conducted by RBI, focusing on Axis Bank’s financial position as of March 31, 2022. The examination revealed several shortcomings, including the bank’s failure to preserve records on customer identification and addresses in certain cases, persistent calls to some customers, inappropriate behavior of recovery agents with delinquent borrowers, lack of tape recording for content/text of recovery agent calls, and failure to obtain declarations from customers when opening current accounts.
Notice and Response
In response to the findings, RBI issued a notice to Axis Bank, prompting the institution to show cause for its failure to comply with RBI’s directions. The issues outlined in the notice included lapses in customer identification, persistent calls, inappropriate behavior by recovery agents, absence of tape recording for certain calls, and failure to obtain declarations for current accounts.
Penalty Imposition
After considering Axis Bank’s response, oral submissions during a personal hearing, and additional submissions, RBI concluded that the charges of non-compliance were substantiated. The central bank deemed it necessary to impose a monetary penalty of ₹90.92 lakh on Axis Bank.
Clarification on Penalty Intent
RBI clarified that the penalty is not intended to validate or invalidate any specific transaction or agreement between the bank and its customers. Instead, it is a measure taken in the exercise of RBI’s regulatory powers to address deficiencies in compliance.
