Shockwaves in Banking: RBI’s Bold Move Against IDFC First and PNB bank

KK SharmaApril 20, 2025 - 3:09 PM

Shockwaves in Banking: RBI’s Bold Move Against IDFC First and PNB Bank

There could be some disciplinary action for violating KYC regulations. Apart from charging a monetary fine of ₹38.60, the Reserve Bank of India imposed further stringent checks on IDFC First Bank regarding KYC rules and conditions for
customer instructions (s). The imposition of sanctions is due to the failure of this bank to observe the KYC circular issued in the year 2016.

Upon inspection, it was discovered that KYC compliance was an area of unwillingness when IDFC First Bank opened many current accounts. The irregularities were viewed with extreme importance by the apex bank under the authority given by Sections 46(4)(i) and 47A(1)(c) of the Banking Regulation Act, 1949.

IDFC accepted it

IDFC First accepted the above regulatory actions in the filings before the exchanges; however, it sought to reassure other stakeholders by claiming that the violations pertained to old cases and that the current state of customer service or financial health is been that the Bank does not operate competitively.The Bank, for its part, reiterated having taken corrective measures, and protecting customer interests is the utmost priority.

PNB Gets a Wake-Up Tap from the RBI

Based on the same reasoning, ₹29.6 lakh was imposed on the PNB too. The regulator found PNB guilty of some violations of customer service dictates in levying service charges on inactive or dormant accounts for not maintaining the minimum balance; RBIs pronounced censure against treating customers on such bases as fair to its customers.

The fines were charged under the Banking Regulations Act about Section 46^4(i), 47A(1)(c), and 51(1). These acts have just led to raising the PNB for scrutiny on any alleged violations of laws protecting consumers from a bank that would consider unreasonably charging them while being inactive for whatever reason.

Disrupting Customer Trust Right in Front of RBI

The RBI’s announcement goes beyond penalising the banks for procedural lapses. It is a reminder that customer-centric principles must be upheld- it’s a no-brainer, and banks must never contravene it.

Such penalties show a wider picture of the RBI’s ongoing crusade for bringing full transparency, restoring trust, and embedding ethical standards deep into the financial fabric. With all of the rapid work in technology and digital adoption in the banking world, such actions of the regulator remind financial institutions that turning a blind eye to customer protection can come at a very heavy cost.

With IDFC First and PNB sitting under the probe, the rest of the industry may be further motivated to delay any of its compliance practices to avert a similar fallout.

Conclusion

While both banks are claiming that their issues were isolated and peculiar to the past, the Reserve Bank of India’s actions did create a ripple or two in the banking world. For the customers, the act serves as a reminder that the central bank is watching and that the customers’ interests supersede everything else in the banking regulations of India.