The Reserve Bank of India (RBI) has imposed a penalty of Rs 29.6 lakh on Hong Kong and Shanghai Banking Corporation Limited (HSBC) for non-compliance with certain card related instructions. The penalty has been imposed on HSBC for non-compliance with certain instructions issued by the RBI on banks’ credit card, debit card and rupee denominated co-branded prepaid card operations, the RBI said in a statement.
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A notice was issued
According to the RBI, a statutory inspection (ISE 2022) was conducted by it for supervisory assessment of the financial position of the bank as on March 31, 2022. It was found that RBI instructions were not followed. A notice was given to the Bank in that regard based on the relevant correspondence. The bank was asked to show cause and why penalty should not be imposed on it for failure to comply with the above instructions.
RBI is not satisfied with the reply
The RBI said that after considering the bank’s reply to the notice, the oral reply given during the personal appearance and the additional information furnished by it, it found that, inter alia, the allegations against the bank were substantiated for which imposition of monetary penalty was necessary. According to the statement, the bank failed to ensure that there was no negative amortization while calculating the minimum payment due on some credit card accounts.
Customers will not be affected
However, the RBI said that the penalty is based on deficiencies in statutory and regulatory compliance. It is not intended to question the validity of any transaction or contract entered into by the Bank with its customers. Further, the imposition of monetary penalty shall not have any adverse effect on any other proceedings initiated by the RBI against the bank.