Amid rising regulatory scrutiny in the banking sector, the Reserve Bank of India (RBI) has imposed a monetary penalty of ₹31.8 lakh on Hongkong and Shanghai Banking Corporation (HSBC) for non-compliance with rules related to inoperative accounts and unclaimed deposits.
The action follows a statutory inspection based on the bank’s financial position as of March 31, 2025. During the review, the central bank identified gaps in adherence to its prescribed guidelines, leading to the issuance of a show-cause notice.
RBI stated that HSBC was given sufficient opportunity to respond, including written submissions and a personal hearing. After reviewing the explanations and supporting documents, the regulator found the charges valid and proceeded with the penalty.
Key deficiencies identified:
- Failure to host a searchable database of unclaimed deposits on its website
- Non-generation of ‘Unclaimed Deposits Reference Number (UDRN)’ in certain cases while transferring funds to the Depositor Education and Awareness (DEA) Fund
These requirements are essential to ensure transparency and help customers trace and claim their unclaimed funds.
What it means for customers:
RBI clarified that the penalty is strictly linked to compliance gaps and does not impact the safety or validity of customer deposits or transactions. However, the findings highlight weaknesses in internal processes that require correction.
Scope for further action:
The central bank noted that the penalty does not rule out additional regulatory measures if further or more serious lapses are identified.
Experts observe that RBI has been tightening compliance norms in recent years, especially around unclaimed deposits and dormant accounts due to their importance in customer protection and financial transparency.
Signal to the banking sector:
The move sends a clear message that even operational lapses can attract penalties. Banks are expected to strengthen systems, improve transparency, and actively help customers access unclaimed funds.
The development reinforces RBI’s continued push for stronger compliance and accountability across the banking ecosystem.
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