RBI Fines HSBC, IIFL Samasta for Compliance Lapses

The Reserve Bank of India (RBI) has imposed monetary penalties on The Hongkong and Shanghai Banking Corporation Limited (HSBC) and IIFL Samasta Finance Limited for regulatory violations. HSBC was fined ₹66.6 lakh for breaches related to Know Your Customer (KYC) norms, reporting of unhedged foreign currency exposures, and deposit interest rate rules. Meanwhile, IIFL Samasta Finance received a ₹33.1 lakh penalty for multiple violations, including charging interest before loan disbursement, NPA misclassification, and improper customer identification practices. Additionally, three cooperative banks in Maharashtra were penalized for regulatory non-compliance.

Key Highlights of RBI’s Action

Penalty on HSBC (₹66.6 lakh)

• Violations identified during a statutory inspection based on financial data as of March 31, 2023.

Major compliance failures

• Outsourced anti-money laundering (AML) alert handling to a group company.
• Failed to report unhedged foreign currency exposures of certain borrowers to credit information companies.
• Opened savings deposit accounts for ineligible entities.
• RBI clarified that the penalty is due to regulatory deficiencies and does not question the legitimacy of customer transactions.

Penalty on IIFL Samasta Finance (₹33.1 lakh)

Found guilty of multiple regulatory breaches, including,

• Charging interest on loans before actual disbursement.
• Incorrect classification of non-performing assets (NPAs).
• Allotting multiple customer identification codes instead of following the Unique Customer Identification Code (UCIC) requirement.

Penalty on Maharashtra’s Cooperative Banks

• Bombay Mercantile Cooperative Bank: ₹33.3 lakh fine for violating banking regulations.
• Lasalgaon Merchants Cooperative Bank: ₹1 lakh penalty for non-compliance with asset classification norms.
• Business Cooperative Bank: ₹1 lakh penalty for regulatory violations.