The Reserve Bank of India (RBI) on Monday said it has imposed a collective penalty of Rs 8.5 crore on eleven commercial banks for violating norms on fraud classification and reporting by commercial banks and selected financial institutions (FIs).

While the RBI imposed a fine of Rs 1.5 crore on the Oriental Bank of Commerce, it slapped a fine of Rs 1 crore each on Indian Overseas Bank, Punjab & Sind Bank, UCO Bank and United Bank of India. Bank of Baroda, Corporation Bank, Federal Bank, Jammu & Kashmir Bank, Punjab National Bank and State Bank of India have been fined Rs 50 lakh each.

“The Reserve Bank of India (RBI) has, by an order dated July 31, 2019, imposed a monetary penalty on eleven banks for non-compliance with certain provisions of “Frauds classification and reporting by commercial banks and select FIs directions 2016″,” the central bank said in a press release.

The central bank said the penalties have been imposed in exercise of powers vested in RBI, considering the failure of the banks to adhere to the aforesaid directions issued by the apex bank.

“This action is based on regulatory compliance deficiencies and is not designed to rule on the validity of any transaction or contract concluded with their clients by the banks,” he added.

The RBI observed that despite having advised banks to report fraud in an account ‘immediately’ in the backdrop of the Central Bureau of Investigation (CBI) having initiated criminal proceedings, the lenders had delayed or did not report fraud.

Based on the findings, the show because notices were issued to banks as to why the penalty should not be imposed for non-compliance with the directions.

“After considering the replies received from the banks, oral submissions made in the personal hearings, where sought by the banks, and examination of additional submissions, if any, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were sustained and warranted imposition of monetary penalty on the aforementioned eleven banks, based on the extent of non-compliance in each bank,” it added.

Writer: Sakshi Gupta

12680cookie-checkRBI slaps Rs 8.5 crore fine on eleven banks for not complying with fraud reporting