RBI penalty on HSBC over inoperative accounts and unclaimed deposits compliance gaps

The Reserve Bank of India said on Friday it imposed a Rs 31.8 lakh penalty on Hongkong and Shanghai Banking Corporation. The action followed non-compliance with RBI directions on inoperative accounts and unclaimed deposits. The RBI said the penalty relates to statutory and regulatory lapses, and not customer transactions or agreements.

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According to the RBI, the case arose after a statutory inspection for supervisory evaluation of the bank. The review was carried out with reference to the bank’s financial position as of March 31, 2025. The RBI said the inspection findings raised compliance concerns linked to its directions and related correspondence.

RBI penalty on Hongkong and Shanghai Banking Corporation: Inspection and process

The RBI said it issued a notice to the bank based on supervisory findings of non-compliance. The RBI reviewed the bank’s reply to the notice. It also considered additional submissions and oral submissions during a personal hearing. After this process, the RBI said the charges were sustained and a monetary penalty was warranted.

RBI penalty on Hongkong and Shanghai Banking Corporation: Issues on unclaimed deposits

The RBI said the bank did not host a searchable database of unclaimed deposits on its website. It also said the bank did not generate and assign an Unclaimed Deposits Reference Number UDRN. This applied to certain unclaimed deposits transferred to the Depositor Education and Awareness DEA Fund.

RBI penalty on Hongkong and Shanghai Banking Corporation: RBI clarification and next steps

The central bank said the penalty is linked to compliance shortcomings only. It said it is not meant to judge the validity of any customer-related transaction. The RBI added that the monetary penalty is without prejudice to any other action the RBI may initiate against the bank.

With inputs from PTI