RBI Fines HDFC Bank And Shriram Finance For Regulatory Lapses

The Reserve Bank of India (RBI) has imposed monetary penalties on HDFC Bank and Shriram Finance Ltd. for failing to comply with specific regulatory guidelines. The actions, announced on July 11, 2025, are the results of independent investigations and are a part of the central bank's ongoing drive to make financial institutions strictly follow its rules.

HDFC Penalised For Breach Of Foreign Investment Rules

HDFC Bank has been fined Rs 4.88 lakh for violating the RBI's foreign investment rules. According to the RBI, the penalty was imposed for contravention of Paragraph 9.3.6 of the 'Master Direction–Foreign Investment in India' issued in January 2018. The bank had allegedly not followed the correct procedure while granting a term loan to one of its clients.

RBI said that it had served HDFC Bank with a show-cause notice, asking for a reason. The bank made written replies and also oral submissions explaining its position. Nevertheless, after considering the case, the RBI decided that the violation was obvious and deserving of a fine. It clarified that this penalty was for failure to comply with regulatory standards and does not impact the legality of the loan or any agreement between the bank and the customer.

Shriram Finance Fined For Violation Of Digital Lending Norm

In a separate case, Shriram Finance was fined Rs 2.70 lakh for not following the RBI's new digital lending rules. These directions, introduced in 2025, aim to bring more transparency and discipline to digital lending practices.

RBI carried out a statutory inspection of the company's operation on its financial position as of March 31, 2024. The central bank discovered that Shriram Finance had facilitated loan repayment to be made through a third-party account and not directly by the borrowers, which is contrary to the digital lending norms.

RBI issued a notice to Shriram Finance and gave time for the company to file its explanation. Upon consideration of written and oral submissions, the RBI established the fact of the default and levied the penalty.

Slips in Regulatory Compliance

The RBI explained that in both cases, the penalties are restricted to regulatory compliance lapses. They are not decisions on the legal merits of the transactions or any arrangements entered into with customers. The central bank also observed that its actions are without prejudice to any additional regulatory action that could be initiated in the future.

As of now, neither HDFC Bank nor Shriram Finance has issued a public statement in response to the RBI's announcements.