The Reserve Bank of India (RBI) imposed fines on YES Bank Ltd and ICICI Bank Ltd on Monday (May 27, 2024) for not following regulatory rules.
RBI declared that ICICI Bank was penalized for not following certain rules about ‘Loans and Advances – Statutory and Other Restrictions’, while Yes Bank’s penalty was due to failures in ‘Customer Service in Banks’ and ‘Unauthorized Operation of internal/office Accounts’.
Fine on ICICI Bank
ICICI Bank was fined Rs 1 crore by Reserve Bank of India for not following certain rules about ‘Loans and Advances – Statutory and Other Restrictions’.
ICICI Bank got fined because it gave loans to some groups instead of using the money set aside for specific projects. The bank didn’t check if these projects would make enough money to repay the loans. The RBI found that the borrowers paid back the loans using their regular funds instead of project money.
Also, the bank didn’t make sure that the loans were for projects that could be tracked and managed easily. This means, ICICI Bank didn’t follow the rules properly when giving out these loans, so it got in trouble.
Fine on Yes Bank
Whereas, YES Bank faced a penalty of Rs. 91 lakh for not following RBI’s instructions regarding ‘customer service in banks’ and the ‘unauthorized operation of internal/office accounts.’
As per RBI rules, banks can only impose fees on customers’ accounts when they have enough funds. If an account hits zero, services must stop to prevent negative balances from fees. These rules, set in 2014, to protect customers and promote clear banking procedures.
Also Read: Latest Savings Account Charges of ICICI Bank, Axis Bank and Yes Bank in 2024
Yes Bank was penalized for two reasons.
Firstly, it charged customers for not keeping a minimum balance in some savings accounts, going against RBI rules.
Secondly, it opened unauthorized internal accounts in customers’ names, using them for improper purposes like holding funds and processing transactions.
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