RBI fines J&K Bank, Bank of Maharashtra, Axis Bank for breaking rules

The statutory inspection was conducted by RBI on March 31, 2021. The examination revealed non-compliance with all the above directions.

Also, extended term loans to a corporation without undertaking due diligence; failing to ensure that the repayment/servicing of said term loans was not made out of budgetary resources and created financial/non-financial messages in SWIFT without first ensuring that the underlying transactions have been duly reflected in the CBS.

The fine was imposed for non-compliance with certain provisions of the RBI directions on Prudential Norms on Income Recognition, Asset Classification, and Provisioning pertaining to Advances – Credit Card Accounts.

For Axis Bank, the RBI said, the bank had levied penal charges in certain accounts for late payment of credit card dues though the customers had paid the dues by the due date, through third-party platforms.

The penalty is for non-compliance with certain directions issued by RBI on Loans and Advances – Statutory and Other Restrictions and Advisory on Man in the Middle (MiTM) Attacks in ATMs.

According to the apex bank's inspection, the bank sanctioned a term loan to a corporation in lieu of or to substitute budgetary resources envisaged for certain projects without undertaking due diligence on the viability and bankability of the projects.

Also, the bank failed to implement the required control measures for ATMs relating to end-to-end encryption of communication between the ATM terminal/PC and the ATM Switch, within the prescribed timeline.