The Reserve Bank of India (RBI) on May 26 said it has imposed a monetary penalty of Rs 84.50 lakh on the Central Bank of India for rule violations.
The penalty has been imposed as the bank failed to report as fraud to RBI certain accounts within seven days of the decision of the Joint Lenders’ Forum (JLF) to declare the accounts as fraud and recovered SMS alert charges from its customers on a flat basis rather than on actual usage basis.
After this, a notice was issued to the bank advising it to show cause as to why a penalty should not be imposed on it for failure to comply with the said directions, as stated therein.
“This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers,” RBI said in a release.
After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty, the release added.
