The Reserve Bank of India (RBI) imposed a monetary penalty of Rs 2.92 crore on Canara Bank for non-compliance. The Bangalore-based public sector bank got penalized with the provisions of directions issued by the Reserve Bank.
The Reserve Bank of India conducted a statutory inspection for supervisory evaluation of the bank with reference to its financial position as on March 31, 2021.
“A scrutiny of the bank was carried out by RBI in July 2020 based on a high-value fraud reported by another bank,” the central bank said in a statement. After scrutiny, the RBI found that the bank failed to link interest on floating-rate retail loans and loans to MSME to an external benchmark and also failed to link interest on floating-rate rupee loans sanctioned and renewed during the financial year 2021 to its Marginal Cost of Lending Rate. The public sector lender, the RBI said, opened several savings deposit accounts in the name of ineligible entities, registered dummy mobile numbers in several credit card accounts, and failed to pay any interest on deposits accepted under the daily deposit scheme and prematurely withdrawn within 24 months of opening of the accounts.
Compliance function in banks, Customer Protection – Limiting Liability of Customers in Unauthorized Electronic Banking Transactions, Customer Service in Banks and Reserve Bank of India – (Know Your Customer (KYC)) Direction, 2016’, are the major deficiency according to RBI’s official statement.
RBI further added that this action is based on 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. India’s central bank said that the Statutory Inspection for Supervisory Evaluation (lSE) of the bank was conducted by RBI with reference to its financial position as on March 31, 2021.
“After considering the bank’s replies to the notices 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, to the extent of non-compliance with such directions,” said RBI.
(With inputs from agencies)
