RBI imposes penalty of Rs 25 lakh on Axis Bank for violating rules

In an order dated September 1, RBI imposed the monetary penalty on Axis Bank for failing to comply with the provisions of  Reserve Bank of India – (Know Your Customer (KYC)) Direction, 2016.

While conducting scrutiny of a customer account during February 2020 and March 2020 maintained with the private bank, RBI noted that Axis Bank did not stick to compliance pertaining to the directions issued by it.

The bank failed to monitor or carry out ongoing due diligence in the said account to ensure that the transactions were consistent with its knowledge about the customer, customer's business, and risk profile, stated an NDTV report.

RBI issued a notice to Axis Bank, asking why the bank should not be penalised for the contravention of the directions.

After taking into consideration, the bank's reply to the notice and the verbal arguments in defence made during the personal hearing, the RBI said it "came to the conclusion that the charge of contravention of/non-compliance with the aforesaid RBI directions was substantiated" and then imposed the monetary penalty, the report added.

However, the RBI added that the penalty is based upon the shortcomings in regulatory compliance and will not effect the validity of any transaction or agreement entered into by Axis Bank with its customers.