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RBI Penalizes ICICI & YES Bank for Regulatory Breaches

Rbi

The Reserve Bank of India (RBI) has recently announced monetary penalties for ICICI Bank and YES Bank due to breaches of regulatory norms, as per an official press release.

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ICICI Bank has been fined Rs 1 crore for providing a term loan to certain entities in place of or to supplement budgetary allocations for specific projects. The bank failed to conduct adequate due diligence to ensure the viability and bankability of these projects, neglecting to verify if the revenue generated from these projects was adequate to cover debt servicing obligations. Additionally, the repayment of these loans was sourced from budgetary allocations without assurance that the funding was designated for monitorable projects.

The RBI clarified that the penalty was imposed solely due to deficiencies in regulatory compliance and does not cast judgment on the legitimacy of any transactions or agreements between the bank and its customers.

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Separately, YES Bank has been fined Rs 91 lakh for charging fees for the non-maintenance of minimum balances in certain savings accounts with insufficient or zero balances. Additionally, the bank was penalized for opening and operating internal accounts in customers’ names without authorization, which were used for purposes such as fund parking and routing customer transactions.

The RBI’s decision to impose penalties followed a thorough assessment of the banks’ responses to notices, oral submissions during personal hearings, and examination of additional submissions. The regulator concluded that certain charges against the banks were substantiated, necessitating the imposition of monetary penalties.

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