The Reserve Bank of India (RBI) has slapped a penalty of Rs 12.19 crore on ICICI Bank and Rs 3.95 crore on Kotak Mahindra Bank for violation of certain banking regulatory norms.

The penalty on private sector lender ICICI Bank was for contravention of norms related to 'Loans and Advances-Statutory and Other restrictions' and 'Frauds classification and reporting by commercial banks and select Fls'.

According to the RBI, ICICI Bank had sanctioned/committed loans to companies in which two of its directors were also directors. The bank had marketed and engaged in the sale of non-financial product and failed to report the frauds to RBI within the prescribed timelines. 

In another statement, the RBI said the penalty on Kotak Mahindra Bank has been imposed for contravention of directions related to "Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks", "Recovery Agents engaged by Banks", "Customer Service in Banks", and "Loans and Advances - Statutory and Other Restrictions".

Kotak Mahindra Bank failed to carry out annual review or due diligence of the service provider, the RBI said in its circular.

The central bank also said that Kotak Mahindra Bank failed to ensure that customers are not contacted after 7 pm and before 7 am.

The banking regulator said the bank levied interest from the disbursement due date instead of the actual date of disbursement, contrary to the terms and conditions of sanction, and levied foreclosure charges despite there being no clause in the loan agreement for levy of prepayment penalty on loans recalled/foreclosure initiated by the bank.

The RBI said the penalties against both banks are based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.