RBI imposes ₹1.7 cr fine on HSBC for violation of rules

The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1,73,75,000 on The Hongkong and Shanghai Banking Corporation (HSBC) Ltd for the violation of the Credit Information Companies Rules.

The RBI said HSBC has been penalised "the contravention of Rule 20(1) of Credit Information Companies Rules, 2006 (CIC Rules). This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of section 25 (1) (iii) read with section 23 (4) of Credit Information Companies (Regulation) Act, 2005."

The RBI said the action is based on the deficiencies in "regulatory compliance", and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

The RBI said it conducted a statutory inspection for supervisory evaluation (lSE) with reference to its financial position as on March 31, 2021. The examination of the risk assessment report and all related correspondences pertaining to the same revealed contravention of certain rules by the bank.

The bank, said the central bank, furnished "incorrect credit information" in respect of a number of expired credit cards with nil dues, to all four credit information companies. Subsequently, HSBC was issued a notice, asking why a penalty should not be imposed on it.

"After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of contravention of the aforesaid CIC Rules was substantiated and warranted imposition of monetary penalty," said the central bank.

In addition to that, the RBI imposed more financial penalties on two more banks -- Bhilai Nagarik Sahakari Bank Maryadit, Bhilai (Chhattisgarh) and The Trichur Urban Co-operative Bank Ltd., Thrissur, Kerala -- for different violations.

The RBl imposed a monetary penalty of ₹1.25 lakh on Bhilai Nagarik Sahakari Bank Maryadit for non-compliance with the provisions of the Banking Regulation Act, 1949 (the Act) and the Depositor Education and Awareness Fund Scheme, 2014.

The RBI's inspection revealed the bank had not transferred eligible unclaimed deposits to the Depositor Education and Awareness Fund within the due date. Later, the RBI issued a notice to the bank and after considering its replies, the charge of non-compliance with RBI directions was substantiated.

In the case of The Trichur Urban Co-operative Bank, the RBI imposed a monetary penalty of ₹2 lakh on the bank for non-compliance with the RBI's directions on the management of advance - UCBs.

On May 2, the RBI imposed financial penalties on eight co-operative banks, including Nagrik Sahakari Bank Maryadit, Raipur (C.G); Ambarnath Jaihind Co-operative Bank Ltd., Ambarnath, Maharashtra; Dhule and Nandurbar Jilha Sarkari Nokaranchi Sahakari Bank Ltd, Dhule (Maharashtra); The Bantra Co-operative Bank Ltd., Howrah, West Bengal; Suvarnayug Sahakari Bank Limited., Pune; National Urban Co-operative Bank Limited, Pratapgarh (UP); the Sutex Co-operative Bank Ltd., Surat (Gujarat); and The Jamnagar District Co-operative Bank Limited (Gujarat). These penalties were imposed for various violations.