One bank has been penalized for non-compliance with certain directions issued by RBI on ‘Data Format for Furnishing of Credit Information to Credit Information Companies and other Regulatory Measures’, ‘Resolution Framework 2.0 – Resolution of Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs)’ and ‘Resolution Framework - 2.0: Resolution of Covid-19 Related Stress of Individuals and Small Businesses’
FinTech BizNews Service
Mumbai, February 26, 2024: RBI has imposed monetary penalties on 2 public sector banks, one private sector bank and an NBFC, as per the separate press releases issued by the RBK today.
RBI has imposed monetary penalty on SBI, Canara Bank, City Union Bank and Ocean Capital Market.
1 The Reserve Bank of India (RBI) has, by an order dated February 26, 2024, imposed a monetary penalty of Rs2 crore (Rupees Two Crore only) on State Bank of India (the bank) for contravention of provisions of sub-section (2) of Section 19 of the Banking Regulation Act, 1949 (the BR Act), and sub-section (2) of Section 26A of the BR Act read with the Depositor Education Awareness Fund Scheme, 2014. This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of Section 47 A (1) (c) read with Sections 46 (4) (i) and 51 (1) of the BR 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. Background The Statutory Inspection for Supervisory Evaluation (ISE 2022) of the bank was conducted by RBI with reference to its financial position as on March 31, 2022. The examination of the Risk Assessment Report/Inspection Report pertaining to ISE 2022, and all related correspondence in that regard, revealed, inter alia, that it (i) held shares as pledgee of an amount exceeding thirty per cent of paid-up share capital of certain companies and (ii) failed to credit eligible amount to Depositor Education and Awareness Fund within the period prescribed in the BR Act. Consequently, 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 the provisions of the BR Act, as stated therein. After considering the bank’s reply to the notice, oral submissions made during the personal hearing and additional submissions made by it, RBI came to the conclusion that the aforementioned charge of contravention of certain provisions of the BR Act was substantiated and warranted imposition of monetary penalty.
2 The Reserve Bank of India (RBI) has, by an order dated February 06, 2024 imposed a monetary penalty of Rs32.30 lakh (Rupees Thirty two lakh thirty thousand only) on Canara Bank (the bank) for non-compliance with certain directions issued by RBI on ‘Data Format for Furnishing of Credit Information to Credit Information Companies and other Regulatory Measures’, ‘Resolution Framework 2.0 – Resolution of Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs)’ and ‘Resolution Framework - 2.0: Resolution of Covid-19 Related Stress of Individuals and Small Businesses’. 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 and section 25(1)(iii) read with section 23(4) of the Credit Information Companies (Regulation) Act, 2005.
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.
Background
The Statutory Inspection for Supervisory Evaluation (lSE 2022) of the bank was conducted by RBI with reference to its financial position as on March 31, 2022. The examination of the Risk Assessment Report/Inspection Report pertaining to ISE 2022, and all related correspondences in that regard, revealed, inter alia, non-compliance with the aforesaid directions by the bank, to the extent it (i) failed to rectify the rejected data and upload the same with the Credit Information Companies (CICs) within seven days of receipt of such rejection report from the CICs and (ii) restructured certain accounts which were not standard assets as on March 31, 2021 under the extant directions. Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions, as stated therein.
After considering the bank’s reply to the notice, and oral submissions made during 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.
3 The Reserve Bank of India (RBI) has, by an order dated February 08, 2024, imposed a monetary penalty of Rs66.00 lakh (Rupees Sixty-six lakh only) on City Union Bank Limited (the bank) for non-compliance with certain directions issued by RBI on 'Prudential Norms on Income Recognition, Asset Classification and Provisioning Pertaining to Advances - Divergence in NPA Accounts' and ‘Reserve Bank of lndia (Know Your Customer (KYC)) Directions, 2016’. This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949.
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.
Background
The Statutory Inspection for Supervisory Evaluation (ISE 2022) of the bank was conducted by RBI with reference to its financial position as on March 31, 2022. The examination of the Risk Assessment Report/Inspection Report pertaining to ISE 2022, and all related correspondence in that regard, revealed, inter alia, non-compliance with the aforesaid directions by the bank, to the extent (i) there was significant divergence between the Non-performing Assets (NPAs), as reported by it and as assessed during the inspection, and (ii) it did not put in place a system of periodic review of risk categorisation of accounts of its customers. Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for the failure to comply with the directions issued by RBI, as stated therein.
After considering the bank’s reply to the notice and oral submissions made by it during the personal hearing, RBI came to the conclusion that the aforementioned charge of non-compliance was substantiated and warranted imposition of monetary penalty.
4 The Reserve Bank of India (RBI) has, by an order dated February 09, 2024, imposed a monetary penalty of Rs16 lakh (Rupees Sixteen lakh only) on Ocean Capital Market Limited, Rourkela, Odisha (the company), for non-compliance with certain provisions of the “Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016 and specific directions issued by RBI to the company, on submission of returns on XBRL platform. This penalty has been imposed in exercise of powers conferred on 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 58 B of the Reserve Bank of India Act, 1934.
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 company with its customers.
Background
The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2022 and examination of the supervisory letter and all related correspondence pertaining to the same revealed, inter alia, that the company had (i) delayed submission of several returns on XBRL platform, (ii) breached exposure limits on lending/investments in respect of single borrowers and single group of borrowers and (iii) not constituted various Committees of the Board. Consequently, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for failure to comply with the RBI directions, as stated therein.
After considering the company’s reply to the notice, additional submissions made by it and oral submissions made during 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.
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