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The Reserve Bank of India imposed a ₹61.95 lakh penalty on Kotak Mahindra Bank for multiple regulatory lapses, including violations related to basic savings accounts, business correspondent agreements, and incorrect reporting to credit bureaus. RBI clarified that the action will not impact customers directly.
RBI Cracks Down: Kotak Mahindra Bank Fined for Regulatory Violations
New Delhi: The Reserve Bank of India (RBI) has imposed a penalty of ₹61.95 lakh on Kotak Mahindra Bank for serious violations of banking regulations. The central bank announced this in an official order issued on Friday. This action was taken due to lapses found in the bank's operations and disregard for regulatory guidelines.
The RBI investigation revealed that Kotak Mahindra Bank failed to comply with several important banking regulations. The investigation found that the bank opened Basic Savings Bank Deposit Accounts (BSBDA) for customers who already had such accounts. This is a direct violation of RBI rules, as a customer cannot hold more than one BSBDA account.
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The central bank's investigation also revealed that Kotak Mahindra Bank entered into agreements with its business correspondents that fell outside the scope of the bank's defined operations. This was deemed a violation of regulations and considered a serious lapse in banking discipline.
Another significant finding of the investigation was that the bank provided incorrect information about some customers to credit bureaus. This negatively impacted the credit scores of the affected customers. According to the RBI, providing inaccurate credit-related information not only affects the financial future of customers but also undermines confidence in the banking system.
Reserve Bank of India
The RBI took this action after inspecting the bank's financial position and operations up to March 31, 2024. The central bank clarified that this penalty will not have any direct impact on the bank's customers and is solely related to regulatory deficiencies.
The RBI stated in its statement that this penalty has been imposed under its statutory powers. This action has been taken in accordance with the provisions of the Banking Regulation Act and the Credit Information Companies (Regulation) Act, 2005. The central bank also clarified that the purpose of this penalty is not to question the validity of any transaction or agreement between a customer and the bank.
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This case clearly demonstrates that the RBI is taking a strict stance to maintain discipline and transparency in the banking system. The central bank will not hesitate to take action against any bank, regardless of its size, for violating regulations. This move is considered crucial for protecting customer interests and maintaining confidence in the banking system.
