The Reserve Bank of India (RBI) on Friday, June 14, imposed a penalty of Rs 1.45 crore on Central Bank of India for non-compliance with certain RBI norms.
“The Reserve Bank of India (RBI) has, by an order dated June 11, 2024, imposed a monetary penalty of Rs 1,45,50,000 on Central Bank of India for non-compliance with certain directions issued by RBI on ‘Loans and Advances – Statutory and Other Restrictions’ and ‘Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’,” the RBI said in a statement.
The RBI conducted Central Bank of India’s Statutory Inspection for Supervisory Evaluation (ISE 2022) with reference to its financial position as on March 31, 2022.
Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a show-cause notice was issued to Central Bank of India, the RBI added.
After considering the bank’s reply, the RBI found that the bank (i) sanctioned a working capital demand loan to a corporation against amounts receivable from Government by way of subsidies; and (ii) failed to credit (shadow reversal) the amount involved in a few instances of unauthorised electronic transaction to the customer’s account within 10 working days from the date of notification by the customer and resolve complaints and provide compensation to certain customers within 90 days from the date of receipt of such complaints.
“The action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transactions or agreement entered into by the bank with its customers. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank,” the RBI said.
Separately, the RBI has also imposed a fine of Rs 96.4 lakh on Sonali Bank PLC.
The penalty on Sonali Bank has been imposed “for contravention of sub-section (1) of Section 15 of the Credit Information Companies (Regulation) Act, 2005 [CIC (R) Act] and the directions issued by RBI under the provisions of the CIC (R) Act on ‘Membership of Credit Information Companies (CICs)’, non-compliance with the ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016’ and the directions issued by RBI on ‘Time-bound implementation and strengthening of SWIFT – related operational controls'”, the RBI said in a separate statement.
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