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RBI imposes Rs. 2.5 crore penalty on three banks
The Reserve Bank of India (RBI) imposed a monetary penalty on three private and public sector lenders on Friday. The central bank charged Jammu & Kashmir Bank with Rs.2.5 crore penalty, while the Bank of Maharashtra faced a fine of Rs.1.45 crore. Axis Bank received the least amount of penalty among them to the tune of Rs.30 lakh.
Jammu & Kashmir Bank:
RBI imposed a Rs.2.5 crore penalty on J&K Bank for non-compliance with certain directions issued by RBI on ‘Creation of a Central Repository of Large Common Exposures-Across Banks’, read with ‘Central Repository of Information on Large Credits (CRILC) – Revision in Reporting’, ‘Loans and Advances – Statutory and other Restrictions’ and ‘Time-bound implementation and strengthening of SWIFT-related operational controls’.
According to RBI's inspection, J&K Bank non-complied in --- (i) failed to ensure integrity and quality of data submitted to CRILC, (ii) extended term loans to a corporation (a) without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects are sufficient to take care of the debt servicing obligations and (b) failing to ensure that the repayment/servicing of said term loans were not made out of budgetary resources and (iii) created financial/non-financial messages in SWIFT without first ensuring that the underlying transactions have been duly reflected in the CBS.
Bank of Maharashtra:
This government-owned bank was imposed with Rs.1.45 crore penalty for non-compliance with certain directions issued by RBI on ‘Loans and Advances – Statutory and Other Restrictions’ and Advisory on ‘Man in the Middle (MiTM) Attacks in ATMs’ (the Advisory).
BoM committed non-compliance in the extent of --- (1) it sanctioned a term loan to a Corporation (i) in lieu of or to substitute budgetary resources envisaged for certain projects; (ii) without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were sufficient to take care of the debt servicing obligations; and (iii) the repayment/servicing of which was made out of budgetary resources, and (2) it failed to implement required control measures for ATMs relating to end-to-end encryption of communication between the ATM terminal/PC and the ATM Switch, within the prescribed timeline.
Axis Bank:
Axis Bank, one of the leading private sector lenders, was penalised with Rs.30 lakh due to its non-compliance with certain provisions of the RBI directions on ‘Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – Credit Card Accounts’.
As per RBI's inspection, Axis Bank had levied penal charges in certain accounts for late payment of credit card dues though the customers had paid the dues by the due date, through third party platforms.
Notably, before imposing the charges, RBI had sent notices to these three banks --- advising them to show cause as to why a penalty should not be imposed on them for failure to comply with the directions issued.
After considering the banks' reply to the notice, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted the imposition of monetary penalty on these banks.
RBI imposes Rs 84.50 lakh penalty on this PSU Bank
RBI on Friday said it has imposed a penalty of Rs 84.50 lakh on Central Bank of India (the bank) for non-compliance with certain provisions of norms related to frauds classification and reporting. The Reserve Bank had conducted statutory inspection for supervisory evaluation of the bank with reference to its financial position as on March 31, 2021.
Examination of the reports revealed that the public sector lender had failed to report as fraud to RBI certain accounts within seven days of decision of Joint Lenders' Forum (JLF) to declare the accounts as fraud.
It had recovered SMS alert charges from its customers on flat basis rather than on actual usage basis.
The RBI had issued a notice to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the directions.
"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 central bank said.
RBI, however, added the penalty 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 imposes penalties on BoI and Federal Bank
Reserve Bank of India (RBI) on Friday said it has imposed a penalty of Rs 5.72 crore on Federal Bank for deficiencies in regulatory compliance.
A penalty of Rs 70 lakh has also been imposed on Bank of India for non-compliance with certain provisions of Know Your Customer (KYC) norms and instructions on 'compliance function in banks' issued by RBI, it said in a statement.
About Federal Bank, RBI said the bank failed to ensure that no incentive (cash or non-cash) was paid to its staff engaged in insurance broking/corporate agency services by the insurance company, according to a separate statement.
RBI had carried out Statutory Inspection for Supervisory Evaluation (lSE) of the bank with reference to its financial position as on March 31, 2020.
In another statement, RBI said a fine of Rs 7.6 lakh has been imposed on Dhani Loans and Services Limited, Gurugram for non-compliance with KYC norms.
RBI said the penalities are 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 two banks and Dhani Loans and Services with their customers.
RBI slaps penalty of Rs 1.95 crore on this private bank
The Reserve Bank of India on Monday imposed a monetary penalty of Rs 1.95 crore on Standard Chartered Bank - India for failing to comply with guidelines issued for customer protection, cyber security, credit card operations and creation of central repository for large exposures.
The RBI conducted a statutory inspection of bank’s books and it’s inspection report revealed that that Standard Chartered had failed to credit the amount involved in the unauthorised electronic transactions back to customer accounts. The regulator’s inspection also revealed that the bank was not reporting cyber security incidents within the prescribed time period.
The RBI which conducted a statutory audit in the bank’s books found that the foreign lender was also non-compliant in authorising the direct sales agents to conduct KYC verification, and failed to ensure integrity and quality of data submitted in Central Repository of Information on Large Credits (CRILC).
“A notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for contravention of directions,@ the RBI said. “After considering the bank’s replies to the notice, oral submissions made during the personal hearing, and additional submissions made by the bank, RBI came to the conclusion that the charge of contravention was substantiated and warranted imposition of monetary penalty on the bank.
APY Penalties: 10 facts you must know before investing
For someone looking for a fixed pension during their retirement, the guaranteed pension scheme of the Government of India — Atal Pension Yojana (APY) — can be worth a look. The APY pension scheme is administered by the Pension Fund Regulatory and Development Authority (PFRDA) and is available to only those who are between 18 and 40 years of age. The other criteria to invest in APY is that one needs to have a savings account in a bank or a post office. APY pension scheme is a deferred pension scheme, i.e. one needs to keep contributing regularly till age 60 and, thereafter, a fixed amount of monthly pension will begin.
Here are a few lesser-known APY pension scheme details to know before you invest:
1. Frequency of contribution
In the initial years, the only option to pay APY contributions was on a monthly basis. However, the individual subscribers also have an option to make the contribution on a quarterly or half-yearly basis in addition to a monthly basis to get APY pension from age 60.
2. Guaranteed pension
The pension amount is a fixed amount that the subscriber is assured to receive from age of 60. However, the actual returns generated by the government may vary. As per the rules, if the accumulated corpus based on contributions earns a lower than estimated return on investment and is inadequate to provide the minimum guaranteed pension, the Central Government would fund such inadequacy. Alternatively, if the actual returns during the accumulation phase are higher than the assumed returns for minimum guaranteed pension, such excess will be passed on to the subscriber.
3. Tax benefit in APY
The amount of investment into APY qualifies for deduction under section 80CCD (1) of the Income-tax Act, 1961 as APY has been notified a pension scheme by the government. The pension that one gets, however, forms a part of one’s total income and is taxed as per one’s tax rate.
4. APY chart – Contributions and corpus
In APY, there is a minimum guaranteed pension of Rs.1000 per month or Rs. 2000 per month or Rs. 3000 per month or Rs. 4000 per month or Rs. 5000 per month. As per the APY chart, these are the APY scheme benefits:
As per the APY calculator, for a minimum guaranteed pension of Rs. 1000 per month, the monthly contribution will be range between Rs 42 and Rs 264 for entry age of 18 to 39. The return of corpus to the nominees will be Rs 1.7 lakh, irrespective of the entry age.
Simiarly, the APY calculator shows that for a minimum guaranteed pension of Rs. 2000 per month, the monthly contribution will be range between Rs 84 and Rs 528 for entry age of 18 to 39. The return of corpus to the nominees will be Rs 3.4 lakh, irrespective of the entry age.
For a minimum guaranteed pension of Rs. 3000 per month, the monthly contribution will be range between Rs 126 and Rs 792 for entry age of 18 to 39. The return of corpus to the nominees will be Rs 5.1 lakh, irrespective of the entry age.
For a minimum guaranteed pension of Rs. 4000 per month, the monthly contribution will be range between Rs 168 and Rs 1054 for entry age of 18 to 39. The return of corpus to the nominees will be Rs 6.8 lakh, irrespective of the entry age.
For a minimum guaranteed pension of Rs. 5000 per month, the monthly contribution will be range between Rs 210 and Rs 1318 for entry age of 18 to 39. The return of corpus to the nominees will be Rs 8.5 lakh, irrespective of the entry age.
The NPS Trust website has the APY calculator to help one calculate the tentative pension and lump Sum amount to expect on maturity or 60 years of age based on regular contributions.
5. Discontinuation
In case one stops making a contribution towards APY, the discontinuation of payment of contribution will not deactivate the APY account immediately. As per the rules, the account will not be deactivated and closed till the account balance with self-contributions minus the Government co-contributions, if there is any, becomes zero due to deduction of account maintenance charges and fees.
6. Penalty
If one makes a delayed payment towards APY, there is a penalty levied for it. The penalty on delayed payment is Rs. 1 per month for the contribution of Rs 100, or part thereof, for each delayed monthly payment instead of different slabs in the past.
7. Renew APY account
In case of default in payment of contribution, one needs to regularise the APY account by paying the overdue amount along with the penalty amount. Once the account is regularised, the pension becomes guaranteed under the scheme.
8. Premature exit
Earlier, any premature exit from the APY scheme before the age of 60 was not allowed except in the event of the death of the subscriber or terminal disease. Subsequently, the rules were changed and one can exit APY voluntarily, subject to the following conditions:
- The contributions made by the subscriber to APY, along with the net actual interest earned on the contributions will be made after deducting the account maintenance charges, and
- If there is any co-contribution made by the government, it will not be returned along with interts earned on the contributions.
9. Government’s co-contribution
All those who had joined the APY before 31st March 2016 and are not members of any statutory social security scheme and who are not income taxpayers get a co-contribution from government into their APY account. The central government co-contributes 50 per cent of the total contribution made by the subscriber or Rs. 1000 per annum, whichever is lower for a period of 5 years, i.e., from Financial Year 2015-16 to 2019-20,
10. Premature death
In case of premature death of APY subscriber i.e. death before 60 years of age, the spouse of the subscriber has the option to continue contributing to APY account of the subscriber, for the remaining vesting period, till the original subscriber would have attained the age 60 years. In case of death of both subscriber and spouse, the entire pension corpus would be returned to the nominee.
RBI slaps fine on Nine banks due to violating norms
The RBI has imposed penalties on nine commercial banks, including SBI, PNB and BoB, for a host of violations, including delay on the reporting of fraud in the account of Kingfisher Airlines in case of two lenders.
The nine lenders in separate regulatory filings said that the penalties have been imposed on them for delay in reporting of frauds. Public sector lender Punjab National Bank (PNB) said the RBI has imposed a penalty of Rs 50 lakh on it for delay in reporting of fraud in the account of Kingfisher Airlines.
Another state-run lender Oriental Bank of Commerce said that the RBI has imposed a fine of Rs 1.5 crore on it for delay in reporting fraud in the account of Kingfisher Airlines. The aforesaid penalty is required to be paid within 14 days from the date of receipt of the RBI order, the bank added.
United Bank of India and Punjab & Sind Bank said they have been fined 1 crore each by the RBI. State Bank of India (SBI) said the RBI imposed a penalty of Rs 50 lakh on it for non-compliance relating to reporting of frauds. The RBI in exercise of the powers conferred under various sections of the Banking Regulations Act, has imposed a penalty of Rs 50 lakh on the bank for non-compliance with its directions relating to reporting of frauds, it said in a filing.
Bank of Baroda and Federal Bank reported a fine of Rs 50 lakh each on them for delay in reporting fraud in an account.
Corporation Bank and UCO Bank also reported imposition of fines by the RBI for delay in reporting of frauds.
The RBI in a release on Friday had said that it had imposed a fine of Rs 1 crore on Corporation Bank non-compliance with the directions on cyber security framework and frauds classification and reporting.
The central bank in another release on Friday had named seven banks that faced penalties of various amounts for violation of its direction on fraud classification and reporting and opening of current accounts. The RBI slapped a penalty of Rs 2 crore each on Allahabad Bank and Bank of Maharashtra, Rs 1.5 crore each on Bank of Baroda, Bank of India, Indian Overseas Bank and Union Bank of India, and Rs 1 crore penalty on Oriental Bank of Commerce.
A scrutiny was carried out by the RBI in the accounts of the companies of a Group and it was observed that the banks had failed to comply with provisions of one or more of the directions issued by the RBI, the release had said. Based on the findings of the scrutiny, notices were issued to the banks advising them to show cause as to why penalty should not be imposed for non-compliance with the directions.
Four PSU Banks fined for violation of KYC norms by RBI
The Reserve Bank of India (RBI) has imposed a penalty of Rs 1.75 crore on four public-sector banks, including PNB and UCO Bank, for non-compliance with KYC requirement and norms for opening of current accounts. While PNB, Allahabad Bank and UCO Bank have been fined Rs 50 lakh each, a Rs 25-lakh penalty has been imposed on Corporation Bank.
Giving details, the RBI said the penalty has been imposed for non-compliance with certain provisions of directions issued by it on know your customer norms or anti-money laundering standards and opening of current accounts. The action, however, 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 banks with their customers, the RBI added.
In a stock exchange filing on Tuesday, UCO Bank said, “We inform that the RBI in exercise of powers conferred under Section 47 (A) (1) (c) read with Section section 51 and 46 (4) (1) of the Banking Regulation Act, 1949, has imposed a penalty of Rs 5 million (Rs 50 lakh) on UCO Bank for non-compliance of RBI directives on ‘KYC norms/AML standards/CFT/obligation of banks and financial institutions under PMLA 2002’ and also on ‘opening of current accounts by banks — need for discipline’.”
Similarly, Allahabad Bank, in a stock exchange filing, said the RBI has imposed a penalty of Rs 50 lakh on the bank for non-compliance of the directions issued the by RBI on “KYC norms/AML standards” and “opening of current accounts”.
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