The RBI has cracked down on ICICI Bank and Kotak Mahindra Bank for non-compliance with banking regulations. ICICI Bank was penalized nearly Rs 12.2 crore for violating lending rules and delays in reporting fraud. The penalty imposed on ICICI Bank is higher than the fine imposed on HDFC Bank, making it a record amount. The RBI found that ICICI Bank had given loans to companies where two directors of the bank held board positions, which violates RBI guidelines. The bank was also found to have marketed and sold non-financial products outside the scope of a commercial bank. Additionally, ICICI Bank failed to report fraud cases to the RBI on time. The RBI served the bank a show-cause notice, and after considering the bank’s response, decided to impose the penalty.

Kotak Mahindra Bank, on the other hand, was fined around Rs 4 crore for various violations related to risk management, outsourcing, recovery agents, and loan practices. The RBI inspected the bank’s financial position and found multiple irregularities. Kotak Bank failed to review or check the operations of its service providers, which is against RBI regulations. The bank also contacted customers for loan recovery after the stipulated hours set by the RBI. Other violations included charging interest from the date of loan approval instead of the date of disbursement, as well as levying a prepayment penalty on small borrowers even though the loan terms did not permit such charges. Following a show-cause notice, the RBI confirmed the violations and imposed the penalty on Kotak Mahindra Bank.

These penalties highlight the RBI’s commitment to ensuring compliance with banking regulations and protecting the interests of consumers. Banks are expected to abide by industry rules and operate within the specified boundaries for transparent and ethical banking practices.