Seven Banks Charged with Monetary Fine for Violating Banking Norms by RBI
On Tuesday, the Reserve Bank of India (RBI) imposed a monetary fine on seven public sector banks for violating various banking rules. The banks on which penalty have been imposed are Bank of Maharashtra, Kotak Mahindra Bank, HDFC Bank, IDBI Bank, Allahabad Bank, Andhra Bank, and Indian Overseas Bank.
The penalty has been imposed mainly for breaching various directions that were issued by the Central Bank (RBI), which included the norms on monitoring of the end-use of funds, reporting of frauds and classification, sharing of information with other banks and reorganizing of accounts. A fine of Rs 1.5 crore has been imposed on banks namely Allahabad Bank, Indian Overseas Banks and Bank of Maharashtra.
Taking into account the failure of the seven banks to hold on to the directions issued by RBI under Banking Regulation Act of 1949 and under the provisions of section 47A (1)(c) along with Section 46(4)(i) the penalties have been imposed due to exercise of power that is vested in RBI.
The RBI further announced that the action is due to lack in regulatory compliance and is not planned to affirm the transaction or agreement that are enrolled into by the banks along with their customers.
HDFC Bank, IDBI Bank, and Kotak Mahindra Bank have also imposed a penalty of Rs 20 lakh each by the central bank, i.e., RBI. The penalty has been imposed due to the violation of various norms of the bank mainly Know Your Customer (KYC) norms and Anti- Money Laundering (AML) standards.
Andhra Bank has been imposed a fine of Rs. 1 crore for violating similar rules of RBI.
In the previous week, the RBI had imposed fine over 11 more banks for non-compliance of various directions.