Tag: penalty

RBI imposes Rs 1 cr penalty on Union Bank of India, BFSI News, ET BFSI

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Mumbai, The Reserve Bank of India (RBI) on Monday said it has imposed a penalty of Rs 1 crore on Union Bank of India for deficiencies in regulatory compliance. The penalty was imposed by an order dated November 25 for non-compliance with the certain provisions of directions issued by the RBI contained in “Reserve Bank of India (Fraud – Classification and Reporting by commercial banks and select FIs) Directions 2016” and “Guidelines on Sale of Stressed Assets by Banks”.

Giving details, the RBI in a statement said the statutory inspection for supervisory evaluation (ISE) of the bank was conducted by it with reference to its financial position as of March 31, 2019.

Examination of the risk assessment report, inspection report and all the related correspondences revealed, inter alia, non-compliance with certain directions to the extent of failure to classify an account as a Red Flag Account despite the presence of early warning signals and failure to disclose ageing of and provisioning for security receipts (SRs) in its annual report, the RBI said.

The central bank, however, added that the penalty 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.



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RBI imposes ₹1 crore penalty on Union Bank of India

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The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1 crore on Union Bank of India (UBI) for non-compliance with certain provisions of its directions relating to fraud classification and reporting and sale of stressed assets.

The central bank, in a statement, said its inspection of UBI revealed, inter alia, non-compliance with the above-mentioned directions to the extent of (i) failure to classify an account as Red Flag Account despite presence of Early Warning Signals and (ii) failure to disclose ageing of and provisioning for Security Receipts (SRs) in its Annual Report.

RBI imposes ₹1 crore penalty on SBI

RBI had conducted Statutory Inspection for Supervisory Evaluation (ISE) of UBI with reference to its financial position as on March 31, 2019 (ISE 2019). It examined the Risk Assessment Report, Inspection Report and all the related correspondences pertaining to ISE 2019.

Following the revelations in ISE, RBI issued a notice to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the RBI directions, as stated therein.

RBI slaps ₹56-lakh penalty on Nainital Bank

After considering the bank’s reply to the notice, oral submissions made during the personal hearing and additional submissions made by the bank, RBI came to the conclusion that the charge of non-compliance with its directions was substantiated and warranted imposition of monetary penalty on the bank, to the extent of non-compliance with the aforesaid directions, per the statement.

RBI said 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.

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RBI imposes ₹1 crore penalty on SBI

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The Reserve Bank of India has imposed a monetary penalty of ₹1 crore on the State Bank of India (SBI) for contravention of a provision in the Banking Regulation (BR) Act, 1949, relating to the extent of shares a Bank can hold in borrower companies.

The central bank said 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 State Bank of India with its customers.

Also see: ARSS Infrastructure Projects case: SEBI rejects ‘acted in good faith’ rule for SBI nominee

RBI said its statutory inspections for supervisory evaluation (ISE) of SBI with reference to its financial positions as on March 31, 2018, and March 31, 2019, and the examination of the risk assessment reports, inspection report and all related correspondence pertaining to the same, revealed contravention of sub-section (2) of section 19 of the BR Act. The contravention is to the extent that the State Bank of India held shares in borrower companies, as pledgee, of an amount exceeding 30 per cent of paid-up share capital of those companies, the central bank said in a statement.

In furtherance to this, a notice was issued to the bank advising the State Bank of India to show cause as to why penalty should not be imposed on it for contravention of the aforesaid provisions of the Act, as stated therein, RBI added.

Also see: Private bank ownership: RBI accepts recommendations of internal working group

After considering the State Bank of India’s reply to the notice, oral submissions made during the personal hearing, and additional submissions made by the bank, RBI came to the conclusion that the charge of contravention of the aforesaid provisions of the Act was substantiated and warranted imposition of monetary penalty on the bank to the extent of contravention of the aforesaid provisions of the Act.

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RBI imposes ₹2 cr penalty on Tata Communications Payment Solutions

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The Reserve Bank of India (RBI) has imposed monetary penalty on Tata Communications Payment Solutions(TCPSL) (₹2 crore) and Appnit Technologies Pvt Ltd (ATPL) (₹54.93 lakh) for non-compliance with directions it issued under the Payment and Settlement Systems Act, 2007 (PSS Act).

The central bank’s statement, said: “It was observed that TCPSL was non-compliant with the directions issued by RBI on White Label ATM deployment targets and net-worth requirement.”

“ATPL was non-compliant with the directions issued by RBI on maintenance of escrow account balance and net-worth requirement.”

Observations by RBI

RBI observed that as these were offences of the nature referred to in Section 26(6) of the PSS Act, notices were issued to the entities.

Also read: Banks, ATM operators seek RBI to review penalty scheme for dry ATMs

As per Section 26(6) of the PSS Act, if any provision of this Act is contravened, or if any default is made in complying with any other requirement of this Act…then, the person guilty of such contravention or default, as the case may be, shall be punishable with fine which may extend to ₹10 lakh and where a contravention or default is a continuing one, with a further fine which may extend to ₹25,000 for every day, after the first during which the contravention or default continues.

After reviewing their written responses and oral submissions made during the personal hearing, RBI concluded that the aforesaid charges of non-compliance with its directions were substantiated and warranted the imposition of monetary penalty.

RBI underscored that the penalties have been imposed in exercise of powers vested in it under the provisions of the PSS Act.

“These actions are based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by the entities with their customers,” the central bank said.

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Banks, ATM operators seek RBI to review penalty scheme for dry ATMs

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Banks and ATM operators are hopeful that the Reserve Bank of India (RBI) will soon review the penalty on ATMs that have run out of cash but many are on a wait-and-watch mode on the expansion of their ATM networks.

“With the penalty in place, it makes more sense to have ATMs on-site along with bank branches than to keep them off-site. This would ensure that the ATMs can be serviced easily and frequently,” noted a senior bank executive.

“We are hopeful that there will be some relief. Otherwise, the penalty could also impact expansion into semi-urban and rural areas as there are often logistical challenges in loading cash,” noted another banker.

The RBI had in August this year announced the scheme of penalty for non-replenishment of ATMs under which ATMs with no cash for more than ten hours in a month will attract a flat penalty of ₹10,000 each. The scheme has come into effect from October 1, 2021.

Scaling down

“The penalty may impact the deployment of ATMs in rural and remote locations. Withdrawals would become difficult in such a scenario, especially when there is a focus on financial inclusion,” said Radha Rama Dorai, Secretary, Confederation of ATM Industry (CATMi).

CATMi had recently also made a representation to the RBI pointing out that while it is supportive of the move that would help customers, the ATM industry is already under tremendous pressure due to Covid, will have no option but to scale down dramatically.

It estimates that about 70 to 80 per cent of semi-urban and rural ATMs and 20 to 30 per cent of urban ATMs will be liable for the penalty. The likely penalty on operators will be around ₹80-100 crore per month, it had said.

“We hope to get a positive response from the RBI on our representation,” said Dorai.

RBI Deputy Governor T Rabi Sankar had on October 8 also said the RBI is reviewing this penalty scheme after getting feedback from lenders.

“We have received various feedback — some positive and some raising concerns. There are issues specific to locations. We are trying to take all the feedback and have a review and see how best it can be implemented,” he had told reporters.

There are about 2.13 lakh ATMs in the country as of September 30, 2021, of which 1.15 lakh are on-site and the balance 97,383 are off-site.

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RBI slaps ₹56-lakh penalty on Nainital Bank

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The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹56 lakh on The Nainital Bank Ltd (NBL), Uttarakhand, for non-compliance with its directions relating to divergence in non-performing asset (NPA) accounts as well as asset classification and provisioning, and classification and reporting of frauds.

Bank of Baroda holds 98.57 per cent stake in the nearly century old bank.

“This penalty has been imposed in exercise of powers vested in RBI under the provisions of…the Banking Regulation Act, 1949,” the central bank said in a statement.

Regulatory non-compliance

It emphasised that 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.

RBI had conducted the statutory Inspection for Supervisory Evaluation (ISE) of the bank with reference to its financial position as on March 31, 2019.

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

The examination of the risk assessment report, inspection report and all related correspondence pertaining to the inspection, revealed, inter alia, non-compliance with the above-mentioned directions to the extent of (i) divergence between bank’s reported NPAs and NPAs assessed by the inspection on account of failure to classify certain borrower accounts as NPA, and (ii) failure to disclose material divergences relating to asset classification and provisioning identified by RBI, despite exceeding the defined threshold, in the notes to accounts, the central bank said.

Further, the report found failure to report frauds as per RBI directions.

Also see: RBI slaps penalty on SBI, StanChart

In furtherance to the same, RBI said a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with its directions, as stated therein.

“After considering the bank’s reply to the notice, oral submissions made during the personal hearing and additional submissions made by the bank, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank, to the extent of non-compliance with the aforesaid directions,” per the statement.

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RBI slaps penalty on SBI, StanChart

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The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1.95 crore on Standard Chartered Bank (StanChart)-India and ₹1 crore on State Bank of India (SBI).

In the case of StanChart, RBI has imposed the monetary penalty for non-compliance with its directions on ‘Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’, ‘Cyber Security Framework in Banks’, ‘Credit Card Operations of banks’ and ‘Creation of a Central Repository of Large Common Exposures – Across Banks’ .

Non-compliance

In the case of SBI, the central bank has imposed the monetary penalty for non-compliance with its directions contained in ‘Reserve Bank of India (Frauds classification and reporting by commercial banks and select FIs) directions 2016’.

RBI had conducted a Statutory Inspection for Supervisory Evaluation (ISE) of StanChart with reference to its financial position as on March 31, 2020. The central bank, in a statement, observed that examination of the Risk Assessment Report, Inspection Report and all related correspondence pertaining to the same, revealed, inter-alia, non-compliance with the above-mentioned directions to the extent of: failure to credit (shadow reversal) the amount involved in the unauthorised electronic transactions; and not reporting cyber security incident within the prescribed time period.

Further, RBI found non-compliance with directions relating to authorising the direct sales agents (outsourced third party) to conduct KYC (know your customer) verification; and failure to ensure integrity and quality of data submitted in Central Repository of Information on Large Credits (CRILC).

RBI said, in furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for contravention of / non-compliance with the aforesaid directions, as stated therein.

“After considering the bank’s replies to the notice, oral submissions made during the personal hearing, and additional submissions made by the bank, RBI came to the conclusion that the charge of contravention of / non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank, to the extent of non-compliance with the aforesaid directions,” per the central bank.

In the case of SBI, RBI had carried out a scrutiny in a customer account maintained with SBI and the examination of the scrutiny report and all related correspondence pertaining to the same, revealed, inter alia, non-compliance with the aforesaid directions to the extent of delay in reporting of fraud in the said account to RBI.

In furtherance to the same, a notice was issued to the bank advising it to show cause why penalty should not be imposed on it for such non-compliance with the said directions.

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

In the case of both the banks, RBI said its 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 them with their customers.

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RBI imposes penalty of Rs 1.95 crore on Standard Chartered Bank, BFSI News, ET BFSI

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The Reserve Bank of India has imposed a penalty of Rs 1.95 crore on Standard Chartered Bank – India, for non-compliance with the directions on customer protection, cyber security, credit card operations, among others, the central bank said in a circular.

Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions, Cyber Security Framework in Banks, Credit Card Operations of banks and Creation of a Central Repository of Large Common Exposures – Across Banks – were the norms the bank failed to comply with, according to the RBI.

A Statutory Inspection for Supervisory Evaluation of the bank had been conducted with reference to its financial position as on March 31, 2020, and the examination of the risk assessment report, inspection report and all related correspondence pertaining to the same revealed the non-compliance with the above-mentioned directions to the extent of failure to credit the amount involved in the unauthorised electronic transactions, not reporting cyber security incident within the prescribed time period, authorising direct sales agents to conduct KYC verification, and failure to ensure integrity and quality of data submitted.

Based on this, the RBI had issued an notice to the bank advising it to show cause as to why penalty should not be imposed on it.

After receiving the bank’s replies to the notice, the RBI came to the conclusion that it would charge a fee for the non-compliance.



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RBI, BFSI News, ET BFSI

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Mumbai, The Reserve Bank of India is reviewing its scheme of penalising banks for non-replenishment of ATMs after getting feedback from lenders, its Deputy Governor T Rabi Sankar said on Friday. In August this year, RBI had announced that it will penalise banks for failure to timely replenish currency notes in ATMs. The scheme, which is aimed at ensuring availability of sufficient cash for the public through ATMs, has come into effect from October 1, 2021.

“We have received various feedback– some positive and some raising concerns. There are issues specific to locations. We are trying to take all the feedback and have a review and see how best it can be implemented,” Sankar told reporters in a post policy call with reporters on Friday.

He said the idea behind the penalty on outages in ATMs is to ensure that cash is available in all ATMs, specially in rural and semi urban areas, all the time.

As per the scheme, cash-out of more than ten hours at any ATM in a month will attract a flat penalty of Rs 10,000 per ATM.

In case of White Label ATMs (WLAs), the penalty would be charged on the bank which is meeting the cash requirement of that particular WLA.

Replying to a query on lower interest rates affecting senior citizens due to fall in fixed deposit rates amid higher inflation, RBI Governor Shaktikanta Das said the cut in repo rate was considered absolutely necessary during the pandemic to support the economy.

“If you are not able to support the overall economy which is collapsing or is moving into a contraction zone, then there would be other major issues for all, including for senior citizens,” he told reporters.

He, however, said one should invest in small savings schemes that are currently offering much higher rates than their actual formula-based rates.

Citing an example, he said the one-year term deposit rate in small savings schemes is at least 170-180 basis points higher than the actual rate which is arrived at by the guidelines.

“In this crisis situation, we should see this (small savings scheme rates) as a fiscal support to senior citizens and middle class and small savers,” Das said. PTI HV

ANU ANU



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