RBI imposes penalties on Citibank, Bank of Baroda, and Indian Overseas Bank.
The Reserve Bank of India has imposed a penalty of Rs 5 crore on Citibank, Rs 4.34 crore on Bank of Baroda, and Rs 1 crore on Indian Overseas Bank
The Reserve Bank of India (RBI) on Friday, November 24, imposed a penalty of Rs 5 crore on Citibank, Rs 4.34 crore on Bank of Baroda, and Rs 1 crore on Indian Overseas Bank (IOB) for non-compliance with norms.
“The Reserve Bank of India (RBI) has, by an order dated November 02, 2023, imposed a monetary penalty of Rs 5.00 crore on Citibank N.A. for contravention of Section 26A of the Banking Regulation Act, 1949 read with Paragraph 3 of ‘The Depositor Education and Awareness Fund Scheme, 2014 – Section 26A of Banking Regulation Act, 1949 – Operational Guidelines’, Section 10(1)(b)(ii) of the BR Act, and non-compliance with RBI Directions on ‘Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’ read with ‘Reserve Bank of India (Know Your Customer (KYC)) Direction, 2016’,” the RBI stated in an announcement.
It stated an examination revealed Citibank (i) didn’t credit score the eligible quantity to Depositor Education and Awareness Fund inside the prescribed time interval, (ii) paid remuneration within the kind of fee to its sure employees members, and (iii) outsourced monitoring and disposal / closure (resolution making perform) of AML (Anti-Money Laundering) alerts to a Group firm.
The RBI individually performed the Statutory Inspection for Supervisory Evaluation (ISE 2021) on Citibank and Bank of Baroda as regards to their monetary place as on March 31, 2021. However, the Inspection on Indian Overseas Bank was performed as regards to its monetary place as on March 31, 2022.
On Bank of Baroda, the RBI imposed a Rs 4.34 crore advantageous “for non-compliance with certain directions issued by RBI on ‘Creation of a Central Repository of Large Common Exposures – Across Banks’ dated September 11, 2013 read with ‘Central Repository of Information on Large Credits (CRILC) – Revision in Reporting’ dated February 13, 2014, ‘Loans and Advances – Statutory and Other Restrictions’, and ‘Reserve Bank of India (Interest Rate on Deposits) Directions, 2016′”.
Following an examination, the RBI revealed Bank of Baroda (i) failed to make sure accuracy and integrity of knowledge on giant exposures submitted to RBI with respect to some accounts, (ii) sanctioned a time period mortgage to a Corporation (a) in lieu of or to substitute budgetary assets envisaged for sure tasks; (b) with out endeavor due diligence on the viability and bankability of the tasks to make sure that income streams from the tasks had been ample to take care of the debt servicing obligations; and (c) the compensation / servicing of which was made out of budgetary assets, (iii) sanctioned a working capital demand mortgage to a Corporation towards quantities receivable from authorities by means of subsidies, and (iv) didn’t pay rate of interest on the deposits accepted from senior residents, as per the schedule of rates of interest disclosed upfront.
The Rs 1 crore penalty on Indian Overseas Bank has been imposed by the RBI “for non-compliance with certain directions issued by RBI on ‘Loans and Advances – Statutory and Other Restrictions’”.
An examination by the RBI on India Overseas Bank revealed (1) time period loans to 2 Corporate entities (i) in lieu of or to substitute budgetary assets envisaged for sure tasks; (ii) with out endeavor due diligence on the viability and bankability of the tasks to make sure that income streams from the tasks had been ample to take care of the debt servicing obligations; and (iii) the compensation/servicing of which was made out of budgetary assets, and (2) a time period mortgage to a different Corporate entity (i) with out endeavor due diligence on the viability and bankability of the tasks to make sure that income streams from the tasks had been ample to take care of the debt servicing obligations; and (ii) the compensation/servicing of which was made out of budgetary assets.
This motion relies on the deficiencies in regulatory compliance and isn’t supposed to pronounce upon the validity of any transaction or settlement entered into by the financial institution with its clients, it stated.
Recently, the RBI additionally imposed Rs 90 penalty on Axis Bank and Rs 42.78 Lakh Fine on Manappuram Finance.
