The Reserve Bank of India (RBI) has imposed monetary penalty on three banks including Rs 5 crore on Bank of India for non-compliance with certain provisions of the directions issued by the apex bank. 

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The RBI has also imposed a monetary penalty of Rs 1.20 crore on Karnataka Bank and Rs 30 lakh on Saraswat Co-operative Bank, the central bank said. 

In the case of Bank of India, the RBI said the penalty was imposed by an order dated February 27, 2020 for non-compliance with certain provisions of the directions issued by RBI on “Income Recognition, Asset Classification and Provisioning pertaining to Advances - Divergence in NPA accounts”, “Opening of current accounts by banks – Need for discipline”, and “Classification and reporting of frauds.”

"This penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47A (1) (c) read with sections 46 (4) (i) and 51 (1) of the Banking Regulation Act, 1949 (the Act). This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers," the RBI said. 

The Reserve Bank said the "statutory inspection of the bank with reference to its financial position as on March 31, 2017 and March 2018 and the Risk Assessment Reports (RARs) pertaining thereto revealed, inter-alia, non-compliance with the above-mentioned directions issued by RBI."

A notice was issued to the bank advising it to show cause as to why penalty should not be imposed for failure to comply with the directions issued by RBI. 

"After considering the bank’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions, RBI concluded that the aforesaid charges of non-compliance with RBI directions warranted imposition of monetary penalty," the apex bank said in a press release. 

In case of Karnataka Bank, the RBI imposed Rs 1.2 crore penalty in an order issued on May 27 for non-compliance with certain provisions of directions issued by RBI on “Prudential Norms on Income Recognition, Asset Classification and Provisioning Pertaining to Advances - Divergence in NPA Accounts” and “Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances”.

The order for Saraswat Co-operative Bank was issued in February 20, imposing a penalty of Rs 30 lakh for non-compliance with directions issued by RBI on ‘Income Recognition and Asset Classification (IRAC) norms.’