HDFC Bank and Shriram Finance Fined by RBI for Violating Banking Norms

The Reserve Bank of India (RBI) has imposed financial penalties on two renowned financial institutions for violating banking regulations. A fine of 4.88 lakh rupees has been imposed on HDFC Bank, while Shriram Finance Limited has been fined 2.70 lakh rupees.

Action against HDFC Bank

According to the Reserve Bank, HDFC Bank violated the Government of India's regulations regarding foreign investment during a term loan transaction. In this regard, the RBI issued a show-cause notice to the bank. The bank responded to this notice both in writing and orally.

Upon investigation, it was clear that HDFC Bank did not follow the proper procedure as per the regulations under the "Authorized Dealer" category. Consequently, the bank has been fined 4.88 lakh rupees.

Decision Against Shriram Finance

Upon reviewing the transactions of Shriram Finance Limited until March 31, 2024, the RBI found violations of the new guidelines for digital lending in 2025. It was discovered that the repayment amount was taken through a third-party account instead of directly from the borrower, which is inappropriate according to RBI regulations. The institution was also issued a notice in this matter. Although the institution provided an explanation, the RBI considered this violation serious and imposed a fine of 270,000 rupees.

Action Only for Regulatory Matters

The RBI clarified that this action was taken not on the legality of transactions with customers, but solely due to non-compliance with regulatory directives.