Tag Archives: monetary penalty

monetary penalty on PNB, BOI

RBI has vide its press release levied monetary penalties of Rs.2 crores and Rs.4 crores each respectively on Punjab National Bank and Bank of India. 

For PNB it is relating to 

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 01, 2016 and, the circular on “Creation of a Central Repository of Large Common Exposures – Across Banks” dated September 11, 2013.

For Bank of India, it is relating to 

non-compliance with certain provisions of directions issued by RBI contained in the “Master Circular on KYC norms/AML standards/ CFT / Obligation of banks under PMLA, 2002” dated July 1, 2014, circular on “The Depositor Education and Awareness Fund Scheme, 2014 – Section 26A of Banking Regulation Act, 1949 – Operational Guidelines” dated May 27, 2014“Master Circular on Frauds – Classification and Reporting” dated July 02, 2012 and circular on “Sale of Financial Assets of Doubtful Standard / Fraudulent Origin to Securitization Company (SC) / Reconstruction Company (RC) – Reporting Requirements” dated April 5, 2011.

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monetary penalty on HDFC Bank

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=51650

RBI has imposed a monetary penalty of Rs.100 million for contravention of section 6(2) and 8 of the Banking Regulation Act, 1949. As usual the press release gives very scant details as to the non compliance involved.

Section 6(2) specifies that no banking company shall engage in any form of business other than that referred to in section 6(1).

Section 6(1) specifies what kinds of business that a banking company can carry out in India. It is a very inclusive definition leaving no scope for banking companies to do any other business other than those specified in this section.

Section 8 specifies that no banking company shall indulge in any buying or selling or bartering of goods or engage in any trade other than in connection with realisation of security held by it or in connection with bills of exchange received for collection or negotiation.

From newspaper reports, it appears that HDFC Bank has indulged in cross selling of products of third party in its auto loan section.

https://timesofindia.indiatimes.com/business/india-business/hdfc-bank-fined-rs-10-crore-by-rbi-in-car-loan-case/articleshow/83052541.cms

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monetary penalty on banks

The Reserve Bank of India (RBI) has, by an order dated May 20, 2021 imposed a monetary penalty of ₹1.00 crore (Rupees One crore only) on Tamilnad Mercantile Bank Ltd. (the bank) for non-compliance with certain provisions of directions issued by RBI on “Cyber Security Framework in Banks” dated June 2, 2016.

The Reserve Bank of India (RBI) has imposed, by an order dated May 19, 2021, a monetary penalty of ₹1 Crore (Rupees one Crore only) on City Union Bank Limited (the bank) for contravention of/non-compliance with certain provisions of the directions contained in the Reserve Bank of India (Lending to Micro, Small & Medium Enterprises (MSME) Sector) Directions, 2017 and the circulars on Educational Loan Scheme and Credit Flow to Agriculture – Agricultural Loans – Waiver of Margin/Security Requirements.

The Reserve Bank of India (RBI) has, by an order dated May 19, 2021, imposed a monetary penalty of ₹10 Lakh (Rupees Ten Lakh only) on Daimler Financial Services India Private Limited, Pune (the company), Maharashtra for non-compliance with certain provisions of the directions issued by RBI contained in ‘Reserve Bank Commercial Paper Directions 2017’ and ‘Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016’

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monetary penalty on ICICI bank

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=51519

The Reserve Bank of India (RBI) has, by an order dated May 03, 2021, imposed a monetary penalty of ₹3 Crore (Rupees Three Crore only) on ICICI Bank Ltd. (the bank) for contravention of certain directions issued by RBI contained in Master Circular on ‘Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks’ dated July 01, 2015. This penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with section 46 (4) (i) of the Banking Regulation Act, 1949 (the Act).

It is not clear exactly what the violation was. Wish RBI could be more clearer when it releases such press releases so that the others banks, compliance officers, public, investors etc. know what is the violation for which the penalty is being levied.

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monetary penalties

The Reserve Bank of India (RBI) has, by an order dated March 22, 2021, imposed a monetary penalty of ₹15 lakh (Rupees Fifteen lakh only) on Fedbank Financial Services Limited, Mumbai (the company) for non-compliance with certain provisions of the directions issued by the Reserve Bank of India (RBI) contained in “Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016”. 

The Reserve Bank of India (RBI) has imposed, by an order dated March 22, 2021, a monetary penalty of ₹6 lakh (Rupees Six lakh only) on Koyana Sahakari Bank Limited, Karad (the bank) for contravention of the directions issued by RBI on Exposure Norms and Statutory / Other Restrictions – UCBs.

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monetary penalties on banks

The Reserve Bank of India (RBl) has imposed, by an order dated March 18, 2021, a monetary penalty of ₹1.00 lakh (Rupees One Lakh only) on Vyavsayik evam Audhyogik Sahakari Bank Limited, Morena, Madhya Pradesh (the bank) for contravention of/ non-compliance with the directions issued by RBI on “Exposure Norms and Statutory/Other Restrictions – UCBs”.

The Reserve Bank of India (RBl) has imposed, by an order dated March 18, 2021, a monetary penalty of ₹1.00 lakh (Rupees one lakh only) on Arvind Sahakari Bank Limited, Katol, Maharashtra (the bank) for contravention of/ non-compliance with the directions issued by RBI on installing Off-site ATMs.

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monetary penalties on banks

The Reserve Bank of India (RBI) has imposed, by an order dated March 17, 2021, a monetary penalty of ₹10.00 lakh (Rupees ten lakh only) on Priyadarshini Urban Co-operative Bank Ltd, Adoni, Kurnool District, Andhra Pradesh (the bank) for contravention of / non-compliance with the directions issued by RBI on sanction of loans to Directors of the Bank, “Income Recognition and Asset Classification norms”, and “Exposure Norms and Statutory / Other restrictions – UCBs”.

The Reserve Bank of India (RBI) has imposed, by an order dated March 17, 2021, a monetary penalty of ₹50.00 lakh (Rupees fifty lakh only) on The Irinjalakuda Town Co-operative Bank Ltd. No.55, Irinjalakuda, Thrissur District, Kerala (the bank) for contravention of/non-compliance with the directions issued by RBI on “Income Recognition and Asset Classification” and on “Management of Advances – UCBs”.

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monetary penalty on SBI

RBI vide its press release dated 16th March, 2021 has announced imposition of penalty of Rs.20 million on the largest bank in India viz. State Bank of India for non compliance with certain directions.

The fine has been imposed for non contravention of section 10 (1) (b) (ii) of the Banking Regulation Act, 1949. This section pertains to payment of commission to certain employees of the bank. Apparently banks are not allowed to pay remuneration via the mode of commission to its employees under this section.

Background

The statutory inspection of the bank with reference to its financial position as on March 31, 2017 and March 31, 2018 and the Risk Assessment Reports (RARs) pertaining thereto, and examination of the correspondence with the bank regarding payment of remuneration to its employees in the form of commission, revealed, inter alia, contravention of the provisions of the Act and aforesaid specific directions issued by RBI. 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 for contravention of the provisions of the Act/ specific directions issued by RBI. After considering the bank’s replies to the notice, oral submissions made in the personal hearing and examination of additional submissions made by it, RBI came to the conclusion that the aforesaid charges were substantiated and warranted imposition of monetary penalty.

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=51277

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monetary penalty on United India Co-op

RBI has vide its press release dated 12th March, 2021 imposed a monetary penalty of Rs.100,000 on United India Co-operative Bank Ltd., Nagina.

This penalty was imposed for non compliance with the provisions of section 27 of the Banking Regulation Act, 1949 read with section 56 of the same act.

Section 27 of the BR Act, pertains to submission of monthly returns by the bank. RBI has not clearly specified which forms and returns were not filed, for how long and the rationale for fixing this penalty. It would be better for compliance management if the RBI were to be more expansive in their press releases regarding non compliances by banks, financial institutions, NBFCs etc. instead of issuing such cryptic notes.

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=51263

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penalty on walchandnagar bank

RBI has vide its press release dated 8th March, 2021 levied a monetary of Rs.5000/- Walchandnagar Sahakari Bank Limited, Pune, for contravention of the provisions of the Credit Information Companies (Regulation) Act, 2005 (CIC Act) and RBI directions on membership of Credit Information Companies by Co-operative Banks. 

The inspection report of the bank based on its financial position as on March 31, 2019, revealed that the bank had failed to obtain membership of any of the four credit information companies. Based on the same, a Notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the provisions of the CIC Act and RBI directions.

After considering the facts of the case, RBI came to the conclusion that the aforesaid charge of non-compliance with the provisions of CIC Act and RBI directions was substantiated and warranted imposition of monetary penalty.

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=51238

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monetary penalty on BOM

RBI has vide its order dated 25th February, 2021 levied a monetary penalty of Rs.20 million on a nationalised bank i.e. Bank of Maharashtra. That penalty is due to massive non compliances relating to contravention of / non-compliance with certain provisions of the directions contained in Reserve Bank of India (Frauds classification and reporting by commercial banks and select FIs) directions 2016 and the circulars on Concurrent Audit System in Commercial Banks – Revision of RBI’s Guidelines, Disclosure of customer complaints and unreconciled balances on account of ATM transactions, and Micro, Small and Medium Enterprises (MSME) Sector – Restructuring of Advances.

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 bank with its customers.

Background

The statutory inspection of the bank with reference to its financial position as on March 31, 2018 and March 31, 2019 and the Risk Assessment Reports (RARs) pertaining thereto revealed, inter alia, non-compliance with the aforesaid directions issued by RBI. In furtherance to the same, notices were issued to the bank advising it to show cause as to why penalty should not be imposed for failure to comply with the directions issued by RBI. After considering the bank’s replies to the notices, oral submissions made in the personal hearing and examination of additional submissions made by it, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=51198

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monetary penalty on banks

RBI has vide their press release dated 3rd February, 2021 intimated regarding levying of penalty of Rs.55 lakhs on Seva Vikas Co-operative Bank Limited, Pune and Rs.1.00 lakh on The Kalpvruksha Co-operative Bank Limited, Tumkur, Karnataka.

Levy on Seva bank due to non-compliance with certain directions issued by RBI contained in the “Master Circular – Management of Advances -UCBs” and “Master Circular – Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs.” The penalty has been imposed for not ensuring end use of funds lent (ii) non-adherence to IRAC norms and (iii) restructuring of loan accounts with retrospective effect on grounds not valid, revealed during a scrutiny of the bank conducted by RBI during 2019.

Levy on Kalpvruksha bank due to non-compliance with certain directions issued by RBI contained in the “Master Circular on Board of Directors-UCBs”. The penalty has been imposed for non-compliance by the bank with the directions prohibiting grant of loans and advances to directors, or their relatives and the firms/concerns/companies in which they are interested, as revealed during the statutory inspection of the bank with reference to its financial position as on March 31, 2019.

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monetary penalties on banks

RBI has vide two separate circulars levied fines of Rs.50,000/- on Alavi Co-operative Bank Limited, Gujarat for contravention of RBI directions on ‘Loans and Advances to Directors, Relatives and Firms/Concerns in which they are Interested’. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.

Another fine of Rs.1 lakh on The Mandvi Mercantile Co-operative Bank Limited, Mandvi, Kutch, Gujarat for the same non compliance.  Additional fine on the Mandvi bank due to non compliance with ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’.

Since there are systemic issues with these co-operative banks, its high time that RBI in collaboration with ICSI puts some system in place to beef up the compliances in these banks. Company Secretaries can be appointed on retainership/ contractual basis to take care of their compliances.

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monetary penalty on Deutsche Bank AG

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=50957

The Reserve Bank of India (RBI) has, by an order dated January 12, 2021, imposed a monetary penalty of ₹2 crore (Rupees Two Crore only) on Deutsche Bank AG (the bank) for non-compliance with certain provisions of directions issued by RBI contained in the “Reserve Bank of India (Interest Rate on Deposits) Directions, 2016”. The penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (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 of the bank with reference to its financial position as on March 31, 2019 and the Risk Assessment Report pertaining thereto revealed, inter-alia, non-compliance with above-mentioned directions issued by RBI. 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 non-compliance with the directions. After considering the bank’s reply to the notice, oral submissions made in the personal hearing and examination of additional submissions, RBI concluded that the charge of non-compliance with aforesaid RBI directions was substantiated and warranted imposition of monetary penalty.

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monetary penalty on Bajaj Finance

https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=50918

The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹2.50 crore (Rupees Two crore Fifty lakh only) on Bajaj Finance Limited, Pune (the company), by an order dated January 05, 2021, for violation of (i) directions issued by RBI on Managing Risks and Code of Conduct in Outsourcing of Financial Services by NBFCs and Fair Practices Code (FPC) for applicable NBFCs, contained in the Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016; and (ii) a specific direction to the company 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. There were also persistent/repeat complaints about recovery and collection methods adopted by the company.

For the above lapses, a notice was issued to the company advising it to show cause as to why 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, RBI concluded that the charge of non-compliance with the aforesaid RBI 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.

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