The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1,45,50,000 on the Central Bank of India for non-compliance with certain directions related to ‘Loans and Advances" and "Customer Protection" rules. 

The apex bank said its statutory inspection refers to the bank's financial position as of March 31, 2022. "Based on supervisory findings of non-compliance, 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," says the RBI. 

After considering the bank’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, the RBI says the bank sanctioned a working capital demand loan to a corporation against amounts receivable from the government by way of subsidies and failed to credit (shadow reversal) the amount involved in a few instances of unauthorised electronic transaction to the customer’s account in 10 working days from the date of notification by the customer. The bank was also accused of failing to resolve complaints and provide compensation to certain customers within 90 days from the date of receipt of such complaints.

"The action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transactions or agreements entered into by the bank with its customers. Further, imposition of a monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank," the RBI says.

The RBI also imposed a monetary penalty worth ₹96.40 lakh on Sonali Bank PLC for violation of certain rules. The RBI says that based on supervisory findings of non-compliance with RBI directions, contravention of provisions of the CIC (R) Act and related correspondence, a notice was issued to the bank, asking why penalty should not be imposed on it for its failure to comply with the certain provisions of CIC (R) Act and the directions issued under BR Act and CIC (R) Act. 

After considering the bank’s reply, the central bank found that the bank had failed to put in place a system of periodic review of risk categorisation of accounts; put in use a robust software throwing alerts for transactions inconsistent with risk categorisation and updated profile of the customers; implement certain SWIFT-related operational controls within the stipulated timelines; and become a member of all the CICs within the stipulated timeline.

Besides, the RBI on Thursday had said it imposed a monetary penalty worth ₹1 lakh on Gujarat Ambuja Co-operative Bank Ltd., Ahmedabad, Gujarat, and a monetary penalty of ₹2 lakh on Nandani Sahakari Bank Ltd., Kolhapur, Maharashtra. The central bank also imposed a penalty worth ₹75,000 on Ramanagaram Urban Co-operative Bank Limited, Karnataka, and ₹50,000 on the Kancheepuram Central Co-operative Bank Ltd., Kancheepuram, Tamil Nadu.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.