The RBI said a scrutiny was carried out during February and March 2020 in a customer account maintained with Axis Bank, and it was observed that the bank had “failed to comply” with directions contained in the Reserve Bank of India – KYC Direction, 2016.
“…the bank failed to monitor/carry out ongoing due diligence in the said account to ensure that the transactions were consistent with its knowledge about the customer, customer’s business and risk profile,” it said in a statement.
A notice was issued to the bank, advising it to show cause why the penalty should not be imposed on it for contravention of the directions.
After considering the reply to the notice and oral submissions made during the personal hearing, the RBI said it “came to the conclusion that the charge of contravention of/non-compliance with the aforesaid RBI directions was substantiated” and warranted imposition of monetary penalty.
The RBI, however, added that the penalty is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.