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Citibank Faces ₹5 Crore Penalty for Regulatory Non-Compliance
RBI Penalty on Banks: The Reserve Bank of India (RBI) has levied a hefty monetary penalty of ₹5 crore on Citibank NA, citing non-compliance with several regulatory directions. The central bank revealed that Citibank contravened provisions of the Banking Regulation Act (BR Act) and failed to adhere to RBI’s directives on ‘Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks read with Know Your Customer (KYC) Direction, 2016.’
According to the RBI statement, Citibank’s shortcomings include a failure to credit the eligible amount to the Depositor Education and Awareness Fund within the prescribed period, payment of remuneration in the form of commissions to certain staff members, and outsourcing the decision-making function of Anti-Money Laundering (AML) alerts to a Group company.
Bank of Baroda Slapped with ₹4.34 Crore Penalty for Multiple Infractions
RBI Penalty on Banks: RBI has imposed a penalty of ₹4.34 crore on Bank of Baroda (BoB) for non-compliance with various regulatory directions. The central bank’s examination of BoB’s Risk Assessment Report/Inspection Report pertaining to ISE 2021 uncovered several violations, including a failure to create a Central Repository of Large Common Exposures Across Banks and non-compliance with ‘Loans and Advances – Statutory and Other Restrictions.’
BoB’s regulatory lapses involved inaccuracies in data on large exposures submitted to RBI, sanctioning a term loan to a corporation without proper due diligence, and granting a working capital demand loan against amounts receivable from the government. The public sector bank also neglected to pay the interest rate on deposits from senior citizens as per the pre-disclosed schedule.
Indian Overseas Bank Penalized ₹1 Crore for Regulatory Shortcomings
RBI Penalty on Banks: Indian Overseas Bank (IOB) faces a monetary penalty of ₹1 crore imposed by RBI for non-compliance with regulatory directions. RBI’s examination of IOB’s Risk Assessment Report/Inspection Report related to ISE 2022 brought to light several violations, primarily in the area of ‘Loans and Advances – Statutory and Other Restrictions.’
IOB’s infractions included sanctioning term loans to corporate entities without due diligence on project viability, budgetary resource substitution, and repayment/servicing from budgetary resources. The bank also granted a term loan without proper due diligence on project viability, leading to repayment/servicing from budgetary resources.
RBI Penalty on Banks: Approach and Intent Behind the Penalties
In all three cases, RBI emphasizes that its imposition of penalties is solely based on identified deficiencies in regulatory compliance. The central bank clarifies that these actions do not intend to pass judgment on the validity of any transaction or agreement between the banks and their customers.
This proactive regulatory stance underscores RBI’s commitment to maintaining the integrity of the banking system, ensuring compliance with established norms, and safeguarding the interests of depositors and stakeholders.
As the financial landscape continues to evolve, such stringent measures aim to reinforce discipline within the banking sector, fostering a culture of robust compliance and accountability.
You can read RBI Press Release to know the banks on which RBI imposes monetary penalties on the link: RBI Press Release
RBI Penalty on Banks: 5 Co-operative Banks under Radar
The RBI has imposed monetary penalties on five co-operative banks for deficiencies in regulatory compliance. These co-operative banks are: Shri Mahila Sewa Sahakari Bank Ltd, Porbandar Vibhagiya Nagarik Sahkari Bank Ltd, Sarvodaya Nagarik Sahakari Bank Ltd, The Khambhat Nagarik Sahakari Bank Ltd and The Vejalpur Nagarik Sahkari Bank Ltd.
Details of these penalties can be read on official press by RBI on the link: RBI Press Release
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