The Reserve Bank of India (RBI) has imposed a substantial monetary penalty of Rs 84.50 lakh on Central Bank of India.
The penalty was imposed on Thursday, May 25, 2023, due to the bank's failure to comply with certain provisions outlined in the 'Reserve Bank of India (Frauds classification and reporting by commercial banks and select FIs) directions 2016' and the 'Master Circular on Customer Service in Banks', the apex bank informed in a statement.
The penalty does not pass judgment on the validity of any transaction or agreement entered into by the bank with its customers, but rather focuses on regulatory compliance shortcomings.
The RBI's action stems from its examination of the Risk Assessment Report, Inspection Report, and associated correspondences pertaining to the Statutory Inspection for Supervisory Evaluation (lSE) of the bank. The inspection referred to the bank's financial position as of March 31, 2021.
During the inspection, it was revealed that Central Bank of India failed to adhere to the aforementioned RBI directions in two areas.
Firstly, the bank neglected to report certain accounts as fraud to the RBI within seven days of the Joint Lenders' Forum (JLF) decision to declare them as such.
Secondly, the bank was found to have collected SMS alert charges from its customers based on a flat fee rather than actual usage.
Following the inspection findings, a notice was issued to the bank, giving it an opportunity to explain why a penalty should not be imposed for non-compliance.
After considering the bank's response to the notice and the oral submissions made during the personal hearing, the RBI concluded that the allegations of non-compliance with the RBI directions were substantiated.
Consequently, the monetary penalty was deemed necessary to address the extent of the bank's non-compliance.
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