RBI Imposes Penalties on Yes Bank and ICICI Bank

The Reserve Bank of India (RBI) has imposed monetary penalties on Yes Bank and ICICI Bank for non-compliance with certain directions issued by it. According to RBI orders, the penalties are ₹91 lakh for Yes Bank and ₹1 crore for ICICI Bank.

Yes Bank and ICICI Reasons on RBI Penalties

Yes Bank:

The penalties on Yes Bank are based on supervisory findings of non-compliance with RBI directions and related correspondence. Key issues identified include:

• Non-Maintenance Charges: Yes Bank levied charges for non-maintenance of the minimum balance in certain savings accounts with insufficient or zero balance.
• Unauthorized Internal Accounts: The BankBank opened and operated certain internal accounts in the name of its customers for unauthorized purposes, such as parking funds and routing customer transactions.

After considering Yes Bank’s response to the notice, oral submissions made during the personal hearing, and examination of additional submissions, RBI found the charges against the BankBank were sustained, warranting the imposition of a monetary penalty.

ICICI Bank:

Separately, RBI stated that ICICI Bank did not comply with specific directions issued by RBI regarding ‘Loans and Advances – Statutory and Other Restrictions. The violations include:

• Term Loan Sanctions:.’ ICICI Bank sanctioned term loans to certain entities instead of or to substitute budgetary resources envisaged for certain projects.
• Lack of Due Diligence: The Bank failed to undertake due perseverance on the viability and bankability of the projects to ensure that revenue streams were sufficient to cover debt servicing obligations.
• Budgetary Resource Dependency: The repayment or servicing of these loans was made out of budgetary resources.
• Unspecified Funding Proposals: ICICI Bank did not ensure the funding proposals were for specific, monitorable projects.

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