RBI: ICICI Bank and Yes Bank were hit with fines by RBI after an inspection for FY22 found non-compliance.
In short
- ‘Loans and Advances – Statutory and Other Restrictions’ was not followed by ICICI.
- ICICI failed in their due diligence to evaluate the sustainability and viability of
- Yes Bank broke the rules on Customer Service in Banks.
ICICI Bank and Yes Bank were fined by the Reserve Bank of India (RBI) on Tuesday for their non-compliance.
RBI penalized ICICI Bank Rs 1 crore for not adhering to the ‘Loans and Advances – Statutory and Other Restrictions’ regulations.
According to the findings of the RBI’s financial year 2022 (FY22) inspection of ICICI Bank, the bank has provided term loans to specific companies in lieu of budgeted resources for specific projects.
Due diligence was not done by ICICI Bank to evaluate the projects’ viability and sustainability and make sure that the money generated would be enough to cover the obligations associated with debt servicing.
Repayment of the loans was made with budgeted resources, however, it was not confirmed that the money was going toward programs that would allow for adequate oversight.
For breaking rules about “Customer Service in Banks” and “Unauthorized Operation of Internal/Office Accounts,” the RBI also fined Yes Bank Rs 91 lakh.
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Upon conducting an inspection of Yes Bank for FY22, it was discovered that the bank had penalized accounts with low or no balances and had created and utilized internal accounts in the names of its clients for unauthorized uses, like processing transactions and parking funds.
