- RBI imposes Rs. 4.20 lakh penalty on HDB Financial Services (order dated October 01, 2025).
- Reason: failure to obtain PAN or Form 60 for certain FY 2023–24 loan accounts.
- Action is for regulatory non-compliance; it does not pronounce on validity of individual loan contracts.
News Update
The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs. 4.20 lakh on
HDB Financial Services Limited for non-compliance with specific provisions of the
RBI (Know Your Customer) Directions, 2016. The breach relates to
not obtaining PAN or Form 60 in certain loan accounts disbursed during FY 2023–24. The order was issued on
October 01, 2025 after inspection, show-cause proceedings, and a personal hearing.
Why PAN or Form 60 Is Critical
- Customer identification & audit trail: Confirms identity when PAN is unavailable.
- Tax compliance: Links financial transactions to the income-tax framework for monitoring and reporting.
- AML/CFT controls: Supports risk profiling and suspicious transaction monitoring under KYC norms.
- Regulatory mandate: For many loan/deposit/transaction thresholds, PAN or Form 60 is compulsory.
What Is Form 60?
Form 60 is a self-declaration submitted to a bank/NBFC by a person who does not have a PAN but
wishes to enter into specified financial transactions (like opening an account, taking a loan above certain limits, etc.).
By signing Form 60, the customer declares personal details and the nature of the transaction, acknowledging that PAN is not
available at the time of the transaction.
What Form 60 Contains (Typical Fields)
- Full name, address, and contact details of the declarant.
- Date of birth and status (individual, HUF, etc.).
- Transaction details: nature, amount, date, and the institution where it is carried out.
- Reason for not having PAN (e.g., applied for PAN, not allotted yet).
- Identification proof details (e.g., Aadhaar or other officially valid document).
- Declaration & signature (including date/place) affirming the correctness of information.
What Banks/NBFCs Check in Form 60
- Completeness & legibility: All mandatory fields filled, declaration signed and dated.
- Identity linkage: Details match with KYC documents (name, DoB, address) and officially valid document provided.
- Transaction mapping: Amount and nature of the loan/transaction tally with internal records and thresholds.
- Reasonability checks: Claimed reason for no PAN (e.g., “applied for PAN”) supported by acknowledgment, where applicable.
- Record-keeping & reporting: Proper storage for audit/tax authorities; follow-up to collect PAN later if required.
- Risk flags: Inconsistencies, repeated high-value transactions without PAN, or mismatched identity details trigger enhanced due diligence.
RBI’s Note
RBI clarified the penalty is for deficiencies in regulatory compliance and is
without prejudice to further action. It does not adjudicate on the validity of any individual transaction or agreement.
Form 60 with valid ID proof—and update PAN with your lender once allotted.
PAN & Form 60: Frequently Asked Questions
1) Why is PAN important in financial transactions?
PAN (Permanent Account Number) links all financial dealings to an individual or entity, helps the government track high-value transactions, prevents tax evasion, and is mandatory for many regulated activities such as property purchases, investments, and large cash deposits.
2) What is Form 60?
Form 60 is a self-declaration submitted when a person entering into specified financial transactions does not have a PAN. It records personal details, transaction information, and ID proof, serving as a temporary substitute until PAN is obtained.
3) When can Form 60 be used?
Form 60 can be used to carry out transactions where PAN is required but not available, such as opening a bank account, applying for a small loan, or making deposits within prescribed limits. For high-value transactions, PAN is mandatory and Form 60 alone is not sufficient.
4) Which transactions are not allowed without PAN?
Without PAN (or valid Form 60, where accepted), you cannot:
- Open most bank accounts (except small/basic accounts).
- Deposit cash above Rs. 50,000 in one day.
- Purchase property valued at Rs. 10 lakh or more.
- Buy or sell motor vehicles (except two-wheelers).
- Invest beyond limits in mutual funds, bonds, or securities.
- Apply for a credit or debit card.
- Make cash payments above Rs. 50,000 for hotels, foreign travel, or jewellery.
5) What details are included in Form 60?
Form 60 typically contains: full name, address, date of birth, contact details, nature and value of transaction, reasons for not having PAN, details of other ID proof, and a signed declaration by the applicant.
6) Do banks/NBFCs accept Form 60 for all loans?
Form 60 may be accepted for small-ticket loans or basic services, but for higher value loans and regulated activities, PAN is compulsory. Lenders use Form 60 as a stop-gap until PAN is submitted.
7) Do I need to update PAN after submitting Form 60?
Yes. Once you obtain a PAN, you must update it with your bank or lender. This ensures compliance with RBI KYC norms and Income Tax rules, and avoids future restrictions on your account or transactions.
8) What risks exist if PAN/Form 60 is not provided?
Without PAN or Form 60, banks may reject transactions, block accounts, or report non-compliance to regulators. Customers may also face difficulties in tax reporting and eligibility for financial products.
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