Kerala-based Federal Bank was fined Rs 5 crore by
the Reserve Bank of India (RBI) for not following procedures on reporting
of data on large corporate loans, assessment of risk-based supervision (RBS) by
RBI, know-your-customer norms and delay in compensation to customer complaints.
On September 25, RBI said it imposed a a monetary penalty
of Rs 50 million (Rs 5 crore) on Federal Bank Ltd for for violation of
Section 19(2) of Banking Regulation Act.
The penalty was for "non-compliance with the directions
issued by RBI on (a) reporting of data on Central Repository of Information on
Large Credits (CRILC), (b) reporting to RBI for assessment under RBS, (c)
payment of compensation for delay in resolution of ATM-related customer
complaints, and (d) Know Your Customer / Anti-money Laundering (KYC/AML)
norms," RBI said in a statement on its website.
The central bank has been very active in penalising banks for
non-compliance of several RBI rules with the major ones including violation of
under-reporting or divergence in classification of non-performing assets (NPAs)
and KYC norms.
This penalty has been
imposed in exercise of powers vested in RBI under the provisions...of the Act,
taking into account the failure of the bank to adhere to the aforesaid
provision of the Act and the directions issued by RBI.
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, RBI added.
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