RBI Charges Penalty Of 10 Crore Rupees On HDFC Bank, Know The Reason?

Business | RBI has imposed a fine of Rs 10 crore on HDFC Bank. On May 28, the Reserve Bank reported that it had imposed a fine of Rs 10 crore on HDFC Bank. The bank is alleged to have violated section 6 (2) of the Banking Regulation Act 1949. The RBI has taken this action using its regulatory rights.

Whistle Blower had complained

An RBI whistle blower had complained of a mess in the bank's auto loan portfolio. The whistleblower had alleged that the bank pressurized its auto loan customers to buy non-financial products from third parties. Following this complaint, the bank had fired six of its employees. With this, the bank's auto loan chief Ashok Khanna had to resign. The RBI also examined documents related to the bank's third-party non-financial products, which revealed the flaw. After this, a show cause notice was also issued to the bank and asked why it should not be fined.

Auto loan customers were forced to buy GPS

After hearing and examining the documents, after receiving the reply from the bank on the show cause notice, RBI came to the conclusion that HDFC Bank had violated the norms. Subsequently, on May 28, the RBI ordered to impose a fine of Rs 10 crore on it. HDFC's auto loan portfolio is alleged to force customers to purchase GPS devices with auto loans. Even the customers did not have an auto loan approval until they were ready to buy a GPS device. This allegation was later found to be true and HDFC suspended six of its employees associated with the case. Investigation revealed that loan customers were pressurized to buy this GPS made in the company of big officials. RBI has imposed a fine of Rs 10 crore on HDFC Bank. On May 28, the Reserve Bank reported that it had imposed a fine of Rs 10 crore on HDFC Bank. The bank is alleged to have violated section 6 (2) of the Banking Regulation Act 1949. The RBI has taken this action using its regulatory rights.