RBI imposes Rs 1.45 crore penalty on Central Bank of India

Central Bank of India

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 1.45 crore on Central Bank of India for non-compliance with certain directions issued by RBI, the central bank said on June 14.

According to an RBI press release, the bank sanctioned a working capital demand loan to a Corporation against amounts receivable from Government by way of subsidies.

Also, it failed to credit the amount involved in a few instances of unauthorised electronic transaction to the customer’s account within 10 working days from the date of notification by the customer, the central bank added.

Further, the bank failed to resolve complaints and provide compensation to certain customers within 90 days from the date of receipt of such complaints, the RBI added while explaining the reasons for the penalty.

The Statutory Inspection for Supervisory Evaluation of the bank was conducted by RBI with reference to its financial position as on March 31, 2022.

Based on supervisory findings of non-compliance with RBI directions and related correspondence a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the directions.

After considering the bank’s reply to the notice,  the RBI found that the following charges against the bank were sustained, warranting imposition of monetary penalty, the RBI said.

The action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transactions or agreement entered into by the bank with its customers.

Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank, the RBI added.

Action against Sonali Bank Plc

In a separate press release, the RBI said it has imposed penalty of Rs 96.4 lakhs on Sonali Bank Plc, a foreign bank originally based in Bangladesh, for violations of certain norms.

In this case also, the statutory inspection of the bank was conducted by RBI with reference to its financial position as on March 31, 2022 and IT examination of the bank was carried out by RBI in March 2022, the RBI said.

During investigations, the RBI found that the bank had failed to put in place a system of periodic review of risk categorisation of accounts. Also, the bank failed to put in use a robust software throwing alerts for transactions inconsistent with risk categorisation and updated profile of the customers, the RBI said.

Further, the bank failed to implement certain SWIFT-related operational controls within the stipulated timelines and become a member of all the CICs within the stipulated timeline, the RBI added.