RBI Fines Yes Bank and ICICI Bank for Non-Compliance with Guidelines

The Reserve Bank of India (RBI) has imposed monetary penalties on Yes Bank and ICICI Bank for not following certain guidelines. Yes Bank has been fined Rs 91 lakh, while ICICI Bank has been penalized Rs 1 crore.

According to the RBI, Yes Bank did not comply with the guidelines on ‘Customer Service in Banks’ and ‘Unauthorized Operation of Internal/Office Accounts.’ The bank was issued a show-cause notice based on supervisory findings, asking why a penalty should not be imposed. After reviewing the bank’s reply, oral submissions during the personal hearing, and additional submissions, the RBI concluded that the charges against Yes Bank were valid, leading to the penalty.

The RBI stated that Yes Bank charged customers for not maintaining a minimum balance in certain savings accounts, even when those accounts had insufficient or zero balance. Additionally, Yes Bank opened and operated internal accounts in customers’ names for unauthorized purposes, such as parking funds and routing customer transactions.

In a separate case, the RBI found that ICICI Bank did not follow certain directions on ‘Loans and Advances – Statutory and Other Restrictions.’ The bank sanctioned term loans to certain entities to substitute budgetary resources for certain projects without properly assessing the projects’ viability. ICICI Bank failed to ensure that the revenue streams from these projects were sufficient to cover the debt servicing obligations. Additionally, the bank did not ensure that the funding proposals were for specific monitorable projects.

These penalties highlight the importance of strict adherence to regulatory guidelines to ensure proper banking practices and customer protection.