The Reserve Bank of India (RBI) on Friday imposed a monetary penalty of 57.50 lakh on state-owned Indian Overseas Bank for non-compliance of certain instructions. The penalty was related to the directions issued by the RBI on Frauds – Classification and Reporting by Commercial Banks and Select Financial Institutions.
reserve Bank of India “This action is based on deficiencies in regulatory compliance and is not intended to impinge on the validity of any transaction or agreement entered into by the Bank with its customers,” it said.
Before the penalty, RBI had done a statutory oversight for supervisory evaluation Bank In respect of its financial position as on 31st March, 2020 and examination of risk assessment reports, inspection reports, and all related correspondence regarding the same.
According to the central bank, the inspection revealed that the directions issued by RBI were not complied with, inter alia, the bank failed to (i) report certain instances of frauds related to ATM card cloning/skimming, RBI within three weeks from the date of detection, (ii) failed to ensure the integrity and quality of data, when it did not report credit information to CRILC on certain borrowers who had total exposure 5 crore and above, and (iii) added certain floating rate loans to micro and small enterprises, which were raised by it to the MCLR/base rate instead of the external benchmark, on or after October 01, 2019.
Subsequently, the RBI issued a notice to the bank advising it to show cause as to why the penalty should not be imposed on it for failure to comply with the directions issued by the central bank.
After considering the bank’s reply to the notice and examining the additional submissions made by it, RBI came to the conclusion that the allegation of non-compliance with the above directions of RBI was substantiated and monetary penalty to the extent of non-compliance imposed on. with such instructions.
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