The Reserve Bank of India (RBI) today imposed a monetary penalty of Rs 25 lakh on Axis Bank for violation of rules. The RBI, in an order dated September 1, held Axis Bank responsible for failing to comply with the provisions of Reserve Bank of India – (Know Your Customer (KYC)) Direction, 2016.
The banking regulator carried out scrutiny during February 2020 and March 2020 in a customer account maintained with the leading private bank. RBI observed that Axis Bank had failed to comply with the directions issued by it as it failed to monitor or carry out ongoing due diligence in the particular account to ensure that the transactions were consistent with its knowledge about the customer, customer’s business, and risk profile.
Subsequently, RBI issued a notice to Axis Bank, asking why the penalty should not be imposed on it for the contravention of the directions.
After considering the reply to the notice and the verbal submissions 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.
However, the RBI added that the penalty is based upon the deficiencies in regulatory compliance and will not impact the validity of any transaction or agreement entered into by Axis Bank with its customers.
On Wednesday, September 1, shares of Axis Bank settled 1.54 per cent higher at Rs 798.50 apiece on the BSE. Axis Bank opened on the BSE at Rs 796, swinging to an intra day high of Rs 819. and an intra day low of Rs 795.95, throughout the trading session so far.