RBI imposes monetary penalty on Kotak Mahindra Bank Limited

Case Brief

RBI imposed a monetary penalty of Rs 1,05,00,000 on Kotak Mahindra Bank Limited by order dated June 29, 2022. The penalty was based on contraventions of Section 26A(2) of the Banking Regulation Act, 1949, read with the Depositor Education and Awareness Fund Scheme, 2014, and non-compliance with RBI directions on customer protection in unauthorised electronic banking transactions and on loans and advances/statutory restrictions. RBI’s inspection found that the bank failed to credit eligible amounts to the Depositor Education and Awareness Fund on time, did not credit shadow reversals to customers’ accounts within 10 working days in certain cases, and did not maintain/apply margin on advances to stock brokers. RBI clarified that the penalty was for regulatory compliance deficiencies and did not determine the validity of any transaction or agreement between the bank and its customers.