The Reserve Bank of India (RBI) has penalized HDFC Bank and Axis Bank by Rs 1 crore and Rs 1.91 crore, respectively. According to an RBI news release, HDFC Bank, the country's largest private sector lender, created savings accounts in the names of qualified companies and distributed presents.

These included paying the first-year subscription for the complimentary life insurance cover, which cost more than Rs 250, to clients when they accepted certain deposits. Additionally, the bank failed to verify that consumers were not approached after 7 p.m. or before 7 a.m.

The RBI performed a statutory inspection of the bank's financial status as of March 31, 2022, based on supervisory findings of non-compliance. As a result, the RBI issued a notice to the bank, directing it to show cause why a penalty should not be imposed for failing to comply with the directives.

And, after reviewing the bank's response to the notice, as well as supplementary and oral representations made during the personal hearing, the RBI determined that the accusations against the bank were maintained.

Meanwhile, the RBI discovered that Axis Bank, the third largest private sector lender, had established certain savings bank accounts in the name of ineligible companies.

Axis assigned various identifying codes to specific consumers rather than a single Unique Customer identifying Code (UCIC). It then got collateral security for agricultural loans up to Rs 160,000 in some situations.

Furthermore, the bank's wholly-owned subsidiary engaged in the business of providing technological services, which is prohibited. The RBI said that a banking organization cannot engage in such activities under Section 6 of the BR Act.