The Reserve Bank of India (RBI) has fined two private banks, Yes Bank and ICICI Bank, for failing to follow regulations. In a statement released Monday evening, the RBI announced a penalty of Rs 91 lakh on Yes Bank and Rs 1 crore on ICICI Bank.
Yes Bank
Yes Bank was fined because it charged customers for not maintaining a minimum balance in certain savings accounts that had little or no money, which goes against RBI rules. Additionally, Yes Bank created and used internal accounts in customers’ names for unauthorized purposes, such as holding funds and processing transactions.
ICICI Bank
ICICI Bank was fined for approving term loans to some entities without properly checking if the projects were viable and if there were sufficient revenue streams to repay the loans. The RBI found that these loans were intended to replace budgetary resources for certain projects. The inspection revealed that the loans were repaid using budgetary resources, and ICICI Bank did not ensure that the loans were for specific, monitorable projects.
Issues Found in FY22
The RBI stated that these penalties were based on issues found during a statutory inspection of the banks’ financial positions for FY22. ICICI Bank was penalized for not complying with ‘Loans and Advances – Statutory and Other Restrictions,’ while Yes Bank faced penalties for lapses in ‘Customer Service in Banks’ and ‘Unauthorized Operation of internal/office Accounts.’
Following the inspection, the RBI sent notices to both banks asking why they should not be fined. After reviewing the responses, the RBI concluded that the violations warranted penalties.
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