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RBI imposes monetary penalty on Axis Bank for rule violations

The RBI imposed a penalty of Rs 5 crore on Axis bank citing certain rule violations

July 28, 2021 / 06:38 PM IST

The Reserve Bank of India (RBI) on July 28 imposed a monetary penalty of Rupees five crore on Axis Bank for non-compliance with certain provisions, the central bank said in a release.

The statutory Inspections for Supervisory Evaluation (ISE) of the bank were conducted by RBI with reference to its financial position as on March 31, 2017 (ISE 2017), March 31, 2018 (ISE 2018) and March 31, 2019 (ISE 2019).

The examinations into a series of reports including the report submitted by the bank in June 2020 relating to a few suspected transactions and related correspondence revealed non-compliance with the above-mentioned directions issued by RBI, the central bank said. Subsequently, notices were 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 said directions, as stated therein.

After considering the bank’s replies to the notices, oral submissions made during the personal hearing and examination of additional submissions made by the bank, RBI came to the conclusion that the charges of non-compliance warranted imposition of monetary penalty on the bank, to the extent of contravention of / non-compliance with the aforesaid directions, the RBI said.

The penalty is violation of certain provisions issued by RBI on ‘Strengthening the Controls of Payment Ecosystem between Sponsor Banks and SCBs/UCBs as a Corporate Customer’ dated May 9, 2019, ‘Cyber Security Framework in Banks’ dated June 2, 2016, ‘Reserve Bank of India (Financial Services provided by Banks) Directions, 2016’ dated May 26, 2016 (Updated as on September 25, 2017), ‘Financial Inclusion- Access to Banking Services – Basic Savings Bank Deposit Account’ dated August 10, 2012 and ‘Frauds – Classification and Reporting’ dated July 02, 2012, the RBI said.

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In separate announcements, the RBI said it has announced penalties on two co-operative banks for rule violations. The central bank imposed a penalty of Rs one lakh on the Mahabaleshwar Urban Cooperative Bank and Rs five lakhs on the Alibag Co-operative Urban Bank.

In the case of Mahabaleshwar Bank, the charges are related to sanctioning of credit facility to the relative of director in violation of rules and the in case of Alibag bank, the penalty is imposed for violating bank gross exposure limit and prudential inter-bank single counter party exposure limit
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