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RBI Imposes Penalties on Bank of India and Bandhan Bank

Penalty on Bank of India

The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1.40 crore on Bank of India for non-compliance with certain directions issued by the central bank. The key areas of non-compliance include:

  1. Interest Rate on Deposits
  2. Customer Service in Banks
  3. Interest Rate on Advances
  4. Central Repository of Information on Large Credits (CRILC) – Reporting
  5. Membership of Credit Information Companies (CICs)
  6. Contravention of Credit Information Companies Rules, 2006

The RBI conducted Statutory Inspection for Supervisory Evaluation (ISE) of the bank with reference to its financial position as on March 31, 2021, and March 31, 2022, and found instances of non-compliance.

Specific Non-Compliance Issues

  1. Not paying interest in certain term deposit accounts as per disclosed rates
  2. Levying SMS alert charges based on invalid mobile numbers, not actual usage
  3. Failing to reset interest rates in MCLR and external benchmark-linked advances at prescribed intervals
  4. Failing to benchmark interest on certain floating rate retail and MSME loans to external benchmarks
  5. Failing to report or inaccurately reporting data on certain large borrowers to CRILC
  6. Failing to furnish accurate information to Credit Information Companies (CICs)

The RBI issued a show-cause notice to the bank, and after considering the bank’s reply, oral submissions, and additional submissions, the central bank found the charges sustained, warranting the imposition of a monetary penalty.

Penalty on Bandhan Bank

The RBI has also imposed a monetary penalty of ₹29.55 lakh on Bandhan Bank for non-compliance with certain directions relating to Interest Rate on Deposits.

Penalty on Indostar Capital Finance

Additionally, the RBI imposed a monetary penalty of ₹13.60 lakh on Indostar Capital Finance for non-compliance with directions on ‘Monitoring of Frauds in NBFCs’ and certain provisions of ‘Know Your Customer (KYC)’.

Regulatory Action and Compliance

The RBI has clarified that the actions are based on deficiencies in regulatory compliance and do not pronounce upon the validity of any transactions or agreements entered into by the banks with their customers. The imposition of monetary penalties is without prejudice to any other action that may be initiated by the RBI against the entities.

These penalties highlight the RBI’s commitment to ensuring strict compliance with regulatory guidelines and maintaining the integrity and stability of the banking and financial system.

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