For breaking several rules, the Reserve Bank fined ICICI Bank Rs.12.19 crore and Kotak Mahindra Bank Rs.3.95 crore on Tuesday. According to the central bank, during ICICI Bank’s mandatory inspections in 2020 and 2021, the lender approved or committed loans to businesses where two of its directors also served as directors.
In addition, the bank sold and promoted non-financial goods and neglected to notify the RBI of frauds within the required time frames.
The Reserve Bank stated that as a result, the bank received a notification directing it to provide justification for why a penalty should not be imposed on it for failing to comply with the terms of the BR Act. Based on the bank’s reply, the Reserve Bank concluded that the penalty should be applied.
However, the RBI stated that the action against ICICI firm is based on the firm’s failures to comply with regulations and is not meant to rule on the legality of any agreements or transactions the bank has made with its clients.
In the meantime, Kotak Mahindra Bank suffered consequences for neglecting to conduct an annual assessment or due diligence on its service supplier. Additionally, it disregarded the appointment and ethical standards of RBI’s recovery agents by failing to make sure that its clients aren’t reached before 7 am or after 7 pm.
The RBI discovered that Kotak Mahindra Bank had violated the terms and conditions of the sanction by charging interest from the date of payout due rather than the actual date of disbursement. Despite the absence of a provision in the loan agreement imposing a prepayment penalty on loans that the bank recalls, the lender nevertheless assessed foreclosure costs.
