RBI Imposes Penalties On YES Bank And ICICI Bank For Regulatory Non-Compliance

The Reserve Bank of India (RBI) penalized YES Bank and ICICI Bank for non-compliance with regulations.

The Reserve Bank of India (RBI) has taken disciplinary action against two significant banking institutions, YES Bank Ltd and ICICI Bank Ltd, for failing to comply with regulatory directives. On Monday, May 27, monetary penalties were imposed on both banks following the detection of various compliance issues.

Penalty on YES Bank

YES Bank was fined ₹91 lakh for non-compliance with the RBI's guidelines on customer service and unauthorized operations within internal/office accounts. During a thorough assessment as part of the Statutory Inspection for Supervisory Evaluation (ISE 2022), the RBI discovered several violations. The bank had levied charges on accounts that did not maintain minimum balances and engaged in unauthorized activities related to internal accounts. Specifically, the RBI found that YES Bank charged customers for non-maintenance of minimum balances in savings accounts that had insufficient or zero balances. Additionally, the bank operated certain internal accounts in the names of its customers for unauthorized purposes, such as parking funds and routing transactions.

Penalty on ICICI Bank

Similarly, ICICI Bank was penalized ₹1 crore for breaching RBI's regulations concerning loans and advances. The bank failed to exercise due diligence in the sanctioning of term loans to various entities, which posed potential financial risks. The RBI's scrutiny highlighted significant lapses in the loan sanctioning process, particularly regarding the evaluation of project viability and the ability to service debts. ICICI Bank had approved term loans to certain entities as substitutes for budgetary resources without adequately assessing the viability and revenue-generating capacity of the projects to ensure they could meet debt servicing obligations.

Shares of YES Bank ended the day slightly up by ₹0.010, closing at ₹23.04, reflecting a 0.043% increase. On the other hand, ICICI Bank shares saw a minor decline, closing at ₹1,129.15, down by ₹2.10, or 0.19%, on the BSE.