The RBI on Friday said it has imposed a penalty of ₹29.6 lakh on The Hongkong and Shanghai Banking Corporation Limited (HSBC) for non-compliance with certain directions related to cards.
Why did the RBI impose the penalty on HSBC?
The penalty has been imposed on HSBC for non-compliance with certain directions issued by Reserve Bank of India (RBI) on ‘Credit Card, Debit Card and Rupee Denominated Co-branded Pre-paid Card operations of Banks’, the central bank said in a statement.
Read more: HDFC Bank introduces new credit card rules from August 1: What are the new changes?
RBI said a Statutory Inspection for Supervisory Evaluation (ISE 2022) of the bank was conducted by it with reference to its financial position as on March 31, 2022.
Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.
After considering the bank’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI said it found, inter alia, that the charge against the bank was sustained, warranting imposition of monetary penalty.
Read more: Indian government bonds included in JPMorgan emerging market index: What happens next?
“The bank failed to ensure that there was no negative amortisation while computing Minimum Payment Due in certain credit card accounts,” it said.
RBI, however, said the penalty is based on deficiencies in statutory and regulatory compliance and is not intended to pronounce upon the validity of any transactions or agreement entered into by the bank with its customers.
Read more: Bank unions ask finance minister to merge regional rural banks with sponsor banks
