RBI Penalties: American Express, HDB Financial

Mumbai, Oct 3 (PTI) The Reserve Bank of India (RBI) on Friday said it has imposed a penalty of Rs 31.80 lakh on American Express Banking Corp for non-compliance with certain directions on 'Credit Card and Debit Card - Issuance and Conduct'.

The central bank has also imposed a penalty of Rs 4.2 lakh on HDB Financial Services for non-compliance with certain provisions of the ‘Reserve Bank of India (Know Your Customer (KYC) Directions, 2016'.

In a statement, the RBI said it conducted a statutory inspection for supervisory evaluation (ISE 2024) of American Express Banking Corp with reference to its financial position as on March 31, 2024.

Based on the supervisory findings of non-compliance with RBI directions and related correspondence, a show cause notice was issued.

After considering the bank's reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found that the charge warranted imposition of monetary penalty.

The American Express Banking Corp did not make any efforts to reverse credit balances of certain credit cardholders, arising out of refund / failed / reversed transactions, to their bank accounts.

RBI also said that the penalty is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

In another statement, RBI said based on supervisory findings of non-compliance with directions and related correspondence in that regard, a show cause notice was issued to HDB Financial Services.

After considering the company's reply to the notice, RBI said it found that the charge was sustained, warranting imposition of monetary penalty.

The company failed to obtain Permanent Account Number (PAN) or equivalent e-document thereof or Form No. 60 in certain loan accounts disbursed during FY 2023-24, RBI said.

In this case also, the central bank said the penalty is based on deficiencies in regulatory compliance and not intended to pronounce upon the validity of any transaction or agreement entered into by the company.