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RBI fines IndusInd Bank Rs 4.5 crore; cites non compliance with these norms

October 17, 2020: RBI said that the penalty has been imposed on the basis of 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.

The violation came to light in the statutory inspection of the bank with reference to its financial position as on 31 March 2019. (Bloomberg image)

October 17, 2020: The Reserve Bank of India has imposed a penalty of Rs 4.5 crore on IndusInd Bank for violating norms such as ‘Exposure Norms’, ‘Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances’, etc. RBI said that the penalty has been imposed on the basis of 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.

‘SPARC – Monitoring of Information Submission by bank’, ‘Creation of a Central Repository of Large Common Exposures – Across Banks’, ‘Central Repository of Information on Large Credits (CRILC) – Revision in Reporting’, and ‘Disclosure in Financial Statements- Notes to Accounts’ were also among the norms violated by IndusInd Bank, said the RBI release. The violation came to light in the statutory inspection of the bank with reference to its financial position as on 31 March 2019. Further, the Risk Assessment Report (RAR) revealed non-compliance with certain directions issued by RBI.

Also Read: Will Indian banks’ credit loss, NPAs surge as new accounting standard sneaks around the corner?

A notice was also issued to the bank advising it to show cause as to why penalty should not be imposed for its failure to comply with the directions issued by RBI. However, after considering the bank’s reply to the notice, oral submissions made during the personal hearing, and examination of additional submissions, RBI decided to impose a monetary penalty on the bank, to the extent of non-compliance with the directions.

Meanwhile, RBI had imposed a monetary penalty of Rs 5 lakh on Chennai-based Shriram City Union Finance for non-compliance with its directions last month. The penalty was imposed on verification of the ownership of gold jewellery contained in NBFC. RBI had also imposed a monetary penalty of Rs 4 crore on Citibank for contravention of certain sections of the Banking Regulation Act, 1949 and for non-compliance, earlier this year.

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