The Reserve Bank of India (RBI) on Tuesday imposed fines on ICICI Bank and Yes Bank for non-compliance.
RBI imposed a fine of Rs 1 crore on ICICI Bank after it failed to comply with regulations related to 'Loans and Advances – Statutory and Other Restrictions'.
RBI's inspection of ICICI Bank for the financial year 2022 (FY22) showed that the bank had given term loans to certain entities as replacements for budgetary resources for certain projects.
ICICI Bank failed to do its due diligence thoroughly to assess the feasibility and sustainability of the projects to ensure that the generated revenue would be sufficient to meet the debt servicing requirements.
The loans were repaid using budgetary resources without verifying that the funds were allocated for projects that could be effectively monitored.
The RBI also imposed a fine of Rs 91 lakh on Yes Bank for violating regulations related to 'Customer Service in Banks' and 'Un-Authorized Operation of Internal/Office Accounts.'
An inspection of Yes Bank for FY22 revealed that the bank had penalised accounts with insufficient or zero balances and had opened and used internal accounts in customers' names for unauthorised activities, such as parking funds and processing transactions.
