Tag: monetary penalty

RBI imposed a monetary penalty of ₹1 crore on Paytm Payments

Banking & Finance

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The RBI has imposed a monetary penalty of ₹1 crore on Paytm Payments Bank (PPBL) and ₹27.78 lakh on Western Union Financial Services Inc (WUFSI).

RBI said the monetary penalty on PPBL has been imposed for an offence under the Payment and Settlement Systems Act, 2007 (PSS Act).

Non-compliance

The penalty on WUFSI, a money transfer service – cross-border in-bound service (customer-to-customer only) operator – has been imposed for non-compliance with certain provisions of RBI’s directions contained in its Master Direction on Money Transfer Service Scheme (MTSS Directions), according to a central bank statement.

Referring to an examination of PPBL’s application for issue of final Certificate of Authorisation (CoA), the RBI said it was observed that PPBL had submitted information which did not reflect the factual position.

The central bank observed that: “As this was an offence of the nature referred to in Section 26 (2) of the PSS Act, a notice was issued to PPBL.

“After reviewing the written responses and oral submissions made during the personal hearing, the RBI determined that the aforementioned charge was substantiated and warranted the imposition of a monetary penalty.”

In the case of WUFSI, RBI noted that it had reported instances of breach of the ceiling of 30 remittances per beneficiary during the calendar years 2019 and 2020, and filed an application for compounding of the violation.

The central bank determined that the aforementioned non-compliance warranted the imposition of a monetary penalty after analysing the compounding application, and oral submissions made during the personal hearing.

The RBI said its action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by PPBL and WUFSI with their customers.

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RBI imposes Rs 50.35 lakh penalty on Nashik-based Janalaxmi Co-operative Bank, BFSI News, ET BFSI

Banking & Finance

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Reserve Bank of India on Monday said it has imposed a penalty of Rs 50.35 lakh on Janalaxmi Co-operative Bank, Nashik for non-compliance with certain regulatory requirements. The penalty on Janalaxmi Co-operative Bank has been imposed for non-compliance with directions issued by RBI on ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks’ and ‘Membership of Credit Information Companies (CICs)’.

A statutory inspection conducted by RBI with reference to the bank’s financial position as on March 31, 2019 and the inspection report pertaining thereto, and examination of all related correspondence revealed non-compliance with the directions, it said in a statement.

RBI has also imposed a penalty of Rs 3 lakh on the Noida Commercial Co-operative Bank, Ghaziabad.

In a separate statement, the central bank said the inspection report of the co-operative bank based on its financial position as on March 31, 2019 revealed that it failed to adhere to the provisions related to director-related loans and opening of new place of business.

However, RBI said the penalities are based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the two lenders with their customers.



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RBI imposes monetary penalty on 14 banks for non-compliance

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The Reserve Bank of India (RBI) imposed monetary penalty aggregating ₹14.5 crore on 14 banks for non-compliance with certain provisions of its directions after a scrutiny in the accounts of the companies of a Group.

The central bank imposed ₹2 crore penalty on Bank of Baroda, ₹1 crore each on 12 other banks and ₹50 lakh on State Bank of India.

RBI imposed ₹1 crore penalty each on Bandhan Bank, Bank of Maharashtra, Central Bank of India, Credit Suisse AG, Indian Bank, IndusInd Bank, Karnataka Bank, Karur Vysya Bank, Punjab and Sind Bank, South Indian Bank, The Jammu & Kashmir Bank and Utkarsh Small Finance Bank.

Bank of Baroda and Karnataka Bank, in their stock exchange disclosures, said the penalty has been imposed on them for non-compliance with the directions issued by the RBI with respect to advances sanctioned to Infrastructure Leasing and Financial Services (IL&FS), and its group companies.

Non-compliance

The central bank, in a statement, said the banks were non-compliant with certain provisions of its directions on ‘Lending to Non-Banking Financial Companies (NBFCs)’, ‘Bank Finance to NBFCs’, ‘Loans and Advances – Statutory and Other Restrictions.’

Further, they were also non-compliant with certain provisions of directions on on ‘Creation of a Central Repository of Large Common Exposures – Across Banks’ read with the contents of Circular on ‘Reporting to Central Repository of Information on Large Credits’, ‘Operating Guidelines for Small Finance Banks’ and for contraventions of provisions of two Sections of Banking Regulation Act, 1949.

“A scrutiny in the accounts of the companies of a Group was carried out by RBI and it was observed that the banks had failed to comply with provisions of one or more of the aforesaid directions issued by RBI and/or contravened provisions of the Banking Regulation Act, 1949,” RBI said in a statement.

In furtherance to the same, the central bank issued notices to the banks advising them to show cause as to why penalty should not be imposed for non-compliance with the directions/contraventions of provisions of Banking Regulation Act, 1949.

“The replies received from the banks, oral submissions made in the personal hearings, wherever sought by the banks, and examination of additional submissions, where made, were duly considered, and to the extent the charges of non-compliance with RBI directions/contraventions of provisions of Banking Regulation Act, 1949 were sustained, RBI concluded that it warranted imposition of monetary penalty on aforementioned fourteen banks,” the statement said.

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RBI imposes monetary penalty on two banks

Banking & Finance

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The Reserve Bank of India has imposed a monetary penalty of ₹4 crore on Bank of India and of ₹2 crore on Punjab National Bank.

The statutory Inspection for Supervisory Evaluation (lSE) of Bank of India was conducted by RBI with reference to its financial position as on March 31, 2019, the RBI said.

The bank had also conducted a review and submitted a Fraud Monitoring Report (FMR) dated January 1, 2019 pertaining to detection of fraud in an account. Examination of the risk assessment report on the ISE and the FMR revealed non-compliance with or contravention of the directions including breach of stipulated transaction limits; delay in transfer of unclaimed balances to DEA Fund; delay in reporting a fraud to RBI and sale of a fraudulent asset, it said.

Penalty on PNB

Meanwhile, the monetary penalty on Punjab National Bank was imposed for non-compliance of certain provisions of directions issued by RBI contained in the Master Directions on ‘Frauds – Classification and Reporting by commercial banks and select FIs’ dated July 1, 2016 and the circular on ‘Creation of a Central Repository of Large Common Exposures – Across Bank’ dated September 11, 2013, the RBI said in a separate statement.

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RBI imposes Rs 3 crore penalty on ICICI Bank, BFSI News, ET BFSI

Banking & Finance

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A penalty of Rs 3 crore has been imposed on ICICI Bank Ltd for contravention of certain directions, the Reserve Bank of India said on Monday.

The RBI has imposed a monetary penalty of Rs 3 crore on ICICI Bank for “contravention of certain directions issued by the RBI contained in Master Circular on ‘Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks’ dated July 1, 2015”, the central bank said in a statement.

It, however, added the 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.

Giving details, the RBI said an examination of correspondence in the matter of shifting of securities from one category to another revealed, inter alia, contravention of the directions.

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

After considering the bank’s reply to the notice, oral submissions made in the personal hearing and examination of additional submissions made by it, the RBI said it came to the conclusion that the charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty.



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RBI fines Bajaj Finance for use of coercive means of recovery

Personal Finance

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RBI concluded that the charge of non-compliance with the directions was substantiated and warranted imposition of monetary penalty.

The Reserve Bank of India (RBI) on Tuesday imposed a monetary penalty of Rs 2.50 crore on Bajaj Finance for using coercive methods of recovery from its borrowers, and violation of general guidelines and one specific direction issued by the regulator. The central bank held the consumer financier guilty of violating directions on managing risks and code of conduct in outsourcing of financial services by non-banking financial companies (NBFCs) and the fair practices code (FPC) for applicable NBFCs. In addition, Bajaj Finance was also found to have violated a specific direction to ensure full compliance with FPC in letter and spirit.

“This penalty has been imposed in exercise of powers vested in RBI under the provisions of clause (b) of sub-section (1) of section 58 G read with clause (aa) of sub-section (5) of section 58B of the Reserve Bank of India Act, 1934, taking into account the failure of the company to ensure that its recovery agents did not resort to harassment or intimidation of customers as part of its debt collection efforts and thereby failing to adhere to the aforesaid directions issued by RBI,” the regulator said in a statement on its website. There were also persistent and repeated complaints about recovery and collection methods adopted by Bajaj Finance, the RBI said.

For the above lapses, a notice was issued to the company advising it to show cause as to why a penalty should not be imposed for such non-compliance. After considering the company’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, the RBI concluded that the charge of non-compliance with the directions was substantiated and warranted imposition of monetary penalty. “This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers,” the regulator said.

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