The Reserve Bank of India has imposed a penalty of Rs 11 crore on seven PSU banks, including Allahabad Bank and Bank of Baroda for violating norms regarding operating the customers’ current accounts and use of funds. Allahabad Bank and Bank of Maharashtra have been penalised by a maximum penalty of Rs 2 crore each. Bank of Baroda, Bank of India, Indian Overseas Bank and Union Bank of India have been penalised by Rs 1.5 crore each. Total penalty imposed on these seven banks is Rs 11 crore. The violated provisions were related to directions issued by the RBI on “Code of Conduct for Opening and Operating Current Accounts”, “Opening of Current Accounts by Banks – Need for Discipline”, “Discounting or Rediscounting of Bills by Banks”, “Reserve Bank of India directions 2016”, “End Use of Funds – Monitoring ” and “Deposits on Balance Sheet Date”.
RBI has clarified that the decision of imposing the monetary penalty is taken after the failure of the banks to adhere to the aforesaid directions issued by RBI. The action 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 central bank has further said in the statement that scrutiny was carried out, where it was found that the banks had failed to comply with the provisions of the directions issued by RBI. Based on the observations, notices were sent to the banks asking for the show cause as to why the penalty should not be imposed for the non-compliance with the guidelines. After receiving the replies from the banks, oral submissions made in the personal hearings and examination of additional submissions, the central bank came to a final conclusion of imposing a monetary penalty on these banks.