The Reserve Bank of India (RBI) on Thursday, April 6, imposed a fine of Rs 55 lakh on Indian Bank for non-compliance with certain provisions of the Reserve Bank of India (Know Your Customer) Directions, 2016.
This action is based on the deficiencies in regulatory compliance observed and is not a comment on the validity of any transaction or agreement entered into by the bank with its customers, the central bank said in a press release.
According to RBI, "A scrutiny of the bank was carried out by RBI in July 2020 based on a high-value fraud reported by the bank. The examination of the scrutiny report and all related correspondence pertaining to the same, revealed, inter alia, non-compliance with the aforesaid directions by the bank to the extent the bank failed to undertake customer due diligence measures as mandated while opening an account in the name of a sole proprietary firm."
Further, a notice was issued to the bank advising it to show cause as to why a penalty should not be imposed on it for failure to comply with the said directions, the apex bank said.
"After considering the bank’s reply to the notice, oral submissions made during the personal hearing and additional submissions made by it, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank, to the extent of non-compliance with such directions," RBI said.
This penalty has been imposed in the exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with sections 46 (4) (i) and 51 (1) of the Banking Regulation Act, 1949, RBI added.
(Edited by : Shoma Bhattacharjee)
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