RBI imposes fines totalling ₹2.5 crore on ICICI Bank, Axis Bank, three others for compliance failures

The Reserve Bank of India (RBI) said on Friday that it has imposed monetary penalties to the tune of ₹2.5 crore on five major Indian banks— ICICI Bank , Axis Bank , Bank of Maharashtra , IDBI Bank , Bank of Baroda —for a variety of compliance failures ranging from cybersecurity breaches and Know Your Customer (KYC) violations to improper interest charges and customer servicing lapses.

ICICI Bank, India’s second-largest private lender, was fined ₹97.8 lakh, the largest among the six, for failing to promptly report a cybersecurity incident, not deploying an effective alert system for certain account types, and levying late fees on customers without sending them credit card statements.

Axis Bank faced a ₹29.6 lakh penalty for routing unauthorised or unrelated transactions through internal or office accounts, breaching RBI’s guidelines on internal operations.

Bank of Maharashtra was fined ₹31.8 lakh for opening several savings accounts via Aadhaar OTP-based e-KYC in non-face-to-face mode, without following prescribed regulatory requirements.

IDBI Bank was slapped with a ₹31.8 lakh fine for overcharging interest on certain Kisan Credit Card (KCC) accounts, in violation of the government’s Interest Subvention Scheme that aims to support India’s farmers with subsidised loan rates.

Bank of Baroda received a ₹61.4 lakh penalty for two key failings—allowing insurance companies to offer non-cash incentives to staff selling insurance products, and not crediting interest regularly to dormant or frozen savings accounts.

Each of these penalties followed RBI’s Statutory Inspection for Supervisory Evaluation (ISE) based on the banks’ financial position either as of March 31, 2023 or 2024. Upon discovering irregularities, the RBI issued show-cause notices to the banks, reviewed their responses and oral submissions, and then proceeded with the fines.

The RBI clarified in all instances that the penalties do not invalidate any specific transactions or agreements made by the banks with their customers. However, the regulator’s actions highlight a clear and tightening grip on compliance—especially in an era where digital banking, financial inclusion, and public trust are central to the health of the financial system.

For customers, these enforcement actions may offer a sense of assurance that banking malpractices—even those that happen behind the scenes—are being addressed. For banks, the message is sharper, compliance must not be treated as a checkbox—it’s fundamental to sustainable banking.