RBI Imposes Penalties on 8 Major Government Banks in 2023 – check the Details

It appears that the Reserve Bank of India (RBI) has imposed monetary penalties on several government banks for various regulatory violations. Here is a summary of the penalties imposed on each bank, along with the reasons behind the penalties:

 

1. state Bank of India

 

Penalty Imposed: ₹1.3 crores on September 21

Reasons:

  • Non-compliance with directions issued by RBI on ‘Loans and Advances – Statutory and Other Restrictions’ and ‘Guidelines on Management of Intra-Group Transactions and Exposures.’

 

Fedbank Financial Services IPO 

Tata Technologies IPO 

Gandhar Oil Refinery IPO 

IREDA IPO

 

2. Indian Overseas Bank

 

Penalty Imposed: ₹2.20 crores on May 29

Reasons:

  • Didn’t transfer the required 25% of disclosed profits for 2020–21 to its reserve funds.
  • Showed a big difference in Non-Performing Assets (NPA).
  • Gave interest on deposits of non-individual constituents at rates applicable to senior/super senior citizens.
  • Failed to implement control measures for ATMs.

 

3.  Indian Bank

 

Penalty Imposed: ₹1.62 crores on September 21

Reasons:

  • Sanctioned a term loan to a corporation without proper financial viability checks.
  • Didn’t shut down several accounts opened using e-KYC in non-face-to-face mode.
  • Opened savings accounts for customers not eligible to maintain any savings deposit accounts.
  • Penalty Imposed: ₹55.00 lakhs on April 06
  • Didn’t follow the required due diligence measures when opening an account in the name of a sole proprietary firm.

 

4. Bank of Maharashtra

 

Penalty Imposed: ₹1.45 crores on June 22

Reasons:

  • Non-compliance with certain directions issued by RBI on ‘Loans and Advances – Statutory and Other Restrictions’ and the Advisory on ‘Man in the Middle (MiTM) Attacks in ATMs.

 

5. Canara Bank

 

Penalty Imposed: ₹2.92 crores on May 9

Reasons:

  • Unsuccessful in linking interest on floating rate retail loans and loans to MSME to an external benchmark.
  • Opened savings deposit accounts in the name of entities that were not eligible.
  • Used fake mobile numbers for various credit card accounts.
  • Didn’t pay interest on deposits accepted under the daily deposit scheme.
  • Charged customers for SMS alerts.
  • Didn’t undertake ongoing customer due diligence.

 

6. Punjab & Sind Bank

 

Penalty Imposed: ₹1 crores on September 21

  • Reason: Failed to credit the eligible amount to the Depositor Education and Awareness Fund within the specified period.

 

7. Central Bank of India

 

Penalty Imposed: ₹84.50 lakhs on May 25

Reasons:

  • Didn’t inform RBI about certain accounts being declared as fraud within 7 days.
  • Charged customers for SMS alerts on a flat basis instead of on an actual usage basis.

 

Bank of Baroda

 

Penalty Imposed: ₹30.00 lakhs on January 30

Reasons:

  • Crossed set transaction limits in small accounts.
  • Didn’t adhere to promised interest rates in certain term deposit accounts.

 

 

These penalties indicate that the RBI is actively enforcing regulatory compliance among banks, addressing issues related to interest rates, customer due diligence, fraud reporting, and adherence to specific guidelines. It’s worth noting that similar actions have been taken against major private sector banks as well.

 

2023-10-13 (4)

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