HDFC Bank top value creator, but KYC a trouble spot: RBI report

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26 Aug, 2025 12:21

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Private lender HDFC Bank has been the most consistent banking player on performance, even topping the chart of value creation for all listed companies. However, it leaves a lot to be desired on KYC and anti-money laundering (AML) front.

The findings are part of RBI risk assessment reports (RARs) as analysed by Moneylife, which were procured by activist Girish Mittal under the Right to Information (RTI) Act.

According to the report, HDFC has consistently generated high value over the past 20 years, not just in the banking sector but among all listed companies.

The central bank also classified it as 'medium risk' against competitors for its aggressive write-off of non-performing assets (NPAs) in FY12-13, and for meeting provisions required with minimum divergence (Rs 47 lakh). There was also no divergence noted in assessed and reported profits for the period, it said.

For FY13-14, the RAR found no great variance in the projected and actual figures for the past three-year period of the Bank.

The central bank also noted that around 90 percent of HDFC current account holders in FY14-15 were not borrowers, which gives the lender risk-free money and negates interest payment requirements.

However, regular lapses and low compliance was noted in the KYC and AML processes for the entire three years period. Of 1.92 million accounts due for KYC updation almost 64.5 percent were incomplete; while in FY14-15 alone, 32,134 cases of KYC and AML exceptions were detected.

In fact, HDFC Bank was penalised Rs 4.5 crore by the RBI in FY13-14 and Rs 26 lakh by the Financial Intelligence Unit, the appeal for the latter is pending, it said.