RBI imposes ₹67 lakh penalty on HSBC Bank for regulatory non-compliance

The Reserve Bank of India (RBI) on Friday, February 28, said that it had imposed a penalty worth ₹66.6 lakh on HSBC Bank, through an order dated February 24, 2025.

The bank has been penalised for three reasons: For outsourcing the closure of Anti-Money Laundering (AML) alerts to another company within its group, failing to report foreign currency exposures of certain borrowers to Credit Information Companies (CICs) and opening savings accounts for ineligible entities.

On March 31, 2023, RBI conducted its statutory inspection of HSBC Bank for Supervisory Evaluation and found that it was non-compliant with the above-mentioned directives.

“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 RBI directions,” the central bank said in the press release.

After considering the bank’s reply to the notice, additional submissions and oral submissions made during the personal hearing, the three charges against HSBC were sustained.

RBI assured that the penalty is based on HSBC’s failure to comply with regulations and does not affect the validity of any transactions or agreements it has made with its customers.

“Further, imposition of a monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank,” it said.