RBI Slaps Rs46.50 Lakh Penalty on American Express Banking, HDB Financial Services and 5 Cooperative Banks
Moneylife Digital Team 06 October 2025
Reserve Bank of India (RBI) has imposed penalties of Rs46.50 lakh on American Express Banking Corp (AEBC), HDB Financial Services Ltd, a non-banking financial company (NBFC) and five cooperative banks for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs31.80 lakh has been imposed on AEBC.
 
The other banks penalised by RBI include: Bagalkot District Central Cooperative (DCC) Bank Ltd and Hassan DCC Bank Ltd from Karnataka, Ranuj Nagrik Sahakari Bank Ltd from Gujarat and Vaniyambadi Town Cooperative Bank Ltd from Tamil Nadu.
 
American Express Banking has been penalised for non-compliance with directions issued by RBI under the Credit Card and Debit Card Issuance and Conduct Directions, 2022.
 
A statutory inspection by RBI revealed that AEBC failed to take necessary steps to reverse credit balances for certain credit cardholders. These balances arose from refunds, failed transactions or reversed transactions, but were not credited back to the customer’s bank accounts.
 
Bagalkot DCC Bank has been fined Rs5.50 lakh for contravening Section 20 of the Banking Regulation Act, 1949 (BR Act) and for non-compliance with directions issued by the National Bank for Agriculture and Rural Development (NABARD) related to the offsite surveillance system, specifically the revised due dates for submission of off-site surveillance system (OSS) and financial monitoring system (FMS) returns.
 
During an inspection, RBI found that Bagalkot DCC Bank had sanctioned a director-related loan and failed to submit certain statutory returns to NABARD within the prescribed timelines, resulting in the penalty.
 
HDB Financial Services has been penalised Rs4.20 lakh for failing to comply with provisions of the RBI Know Your Customer (KYC) Directions, 2016. RBI found out that the NBFC did not obtain a permanent account number (PAN), an equivalent e-document or form no60 for certain loan accounts disbursed during FY23-24.
 
RBI, during a statutory inspection of Ranuj Nagrik Sahakari Bank, found out that the lender failed to ensure end-use of funds with respect to certain loans sanctioned by it and enable its customers to instantly respond by ‘reply’ to the SMS alerts to notify the objection towards unauthorised electronic banking transactions, if any.
 
As a result, RBI imposed a penalty of Rs3 lakh on Ranuj Nagrik Sahakari Bank.
 
Vaniyambadi Town Cooperative Bank has been fined Rs1 lakh for non-compliance with directions issued by RBI under the supervisory action framework (SAF) and KYC guidelines. RBI found that the bank sanctioned certain fresh loans and advances exceeding the applicable single borrower exposure limits and granted some loans with risk weights exceeding 100%, in violation of the SAF directions. Additionally, the lender failed to upload customer KYC records to the central KYC records registry (CKYCR) within the prescribed timeline.
 
Karnataka-based Hassan DCC Bank has been fined Rs1 lakh for violations of Section 19 of the BR Act and non-compliance with KYC directions. RBI found that the lender held shares in another cooperative society in contravention of the BR Act and failed to upload customer KYC records to the CKYCR within the prescribed timeline.
 
In all six cases, RBI states that the penalties are based on deficiencies in regulatory compliance and are not intended to pronounce on the validity of any transaction or agreement entered into with their customers.
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