The Reserve Bank of India (RBI) imposed monetary penalties on both ICICI Bank and YES Bank for breaching various regulatory norms, as stated in a recent press release.
ICICI Bank incurred a fine of Rs 1 crore for granting a term loan to specific entities instead of utilising budgetary resources designated for particular projects. The bank failed to conduct adequate due diligence on the feasibility and financial viability of these projects, neglecting to ensure that project revenues were adequate to meet debt servicing obligations. Moreover, loan repayments were sourced from budgetary funds and the bank did not verify if funding proposals were allocated to monitorable projects.
The RBI clarified that its actions were solely based on identified regulatory compliance shortcomings and did not pass judgment on the validity of transactions or agreements between the bank and its customers.
In a separate instance, YES Bank was penalized Rs 91 lakh for imposing charges on certain savings accounts with insufficient balances, including zero balance accounts. Additionally, the bank faced penalties for establishing and operating internal accounts under customers' names without authorisation, utilising them for purposes such as fund parking and routing customer transactions.
The RBI, after reviewing the bank's responses to the notice, oral submissions during personal hearings and additional submissions, concluded that the charges against YES Bank were substantiated, warranting the imposition of monetary penalties, according to the regulatory body.
