Tag: non compliance

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.