RBI imposes Rs 29.60 lakh penalty on HSBC Bank for non-compliance with card transaction rules

The Reserve Bank of India (RBI) recently announced the imposition of a fine of Rs 29.60 lakh on HSBC Bank for non-compliance with regulatory directives regarding operations of credit cards, debit cards and rupee-denominated co-branded prepaid cards.

An RBI statement released on June 28 shows that HSBC Bank has failed to follow specific directions contained in the document “Reserve Bank of India (Credit and Debit Card – Issuance and Processing) Guidelines, 2022”. These guidelines set out measures to ensure operational transparency and customer protection in the banking sector. Such as a proper system for tracking the use of money.

The bank neglected to prevent negative amortization when calculating the minimum amount due on certain credit card accounts.

The penalty follows the Statutory Evaluation Oversight Inspection (ISE 2022), carried out to assess the bank’s compliance status. After identifying significant discrepancies in compliance with regulatory guidelines, the RBI issued a notice to HSBC Bank.

In response, HSBC Bank presented its defense, which included oral submissions at an in-person hearing and additional written submissions. However, the RBI rejected the arguments advanced by HSBC Bank and imposed a penalty of Rs 29.60 lakh.