In a major development, the Reserve Bank of India (RB) has imposed a penalty of Rs 10 crores on HDFC Bank Limited for contravention of provisions of section 6(2) and section 8 of the Banking Regulation Act, 1949 (the Act). This action is based on deficiencies in regulatory compliance.

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The central bank said that the penalty has been imposed as actions of HDFC Bank were found in contravention of provisions of section 6(2) and section 8 of the Banking Regulation Act, 1949, according to news agency IANS.

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This action 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, the RBI said in a statement.

An examination of documents in the matter of marketing and sale of third-party non-financial products to the bank`s customers, arising from a whistle blower complaint to RBI regarding irregularities in the auto loan portfolio of the bank, revealed, inter alia, contravention of the afore-said provisions of the Act and the regulatory directions, it said.

Notice was subsequently issued to the bank advising it to show cause as to why the penalty should not be imposed for contravention of the provisions of the Act/directions.

After considering the bank`s reply to the show cause notice, oral submissions made during the personal hearing and examination of further clarifications and documents furnished by the bank, the RBI came to the conclusion that the aforesaid charge of contravention of provisions of the Act was substantiated and warranted imposition of monetary penalty, the RBI statement said.