RBI also imposed a penalty of Rs 1.2 crore on Karnataka Bank for non-compliance with central bank’s directions.
The Reserve Bank of India (RBI) imposed monetary penalties on Bank of India, Karnataka Bank and Saraswat Cooperative Bank for non-compliance on income recognition and asset classification (IRAC) norms, according to three different orders released by the regulator on late Thursday evening.
“A monetary penalty of Rs 5 crore on Bank of India for non-compliance with certain provisions of the directions issued by RBI on IRAC and provisioning pertaining to advances, divergence in non-performing assets (NPA) accounts,” RBI said in its release.
The matter of Bank of India relates to inspection done by the RBI in 2017 and 2018. The regulator had earlier sent a ‘show-cause’ notice to the bank on why the penalty should not be imposed on it. “The RBI concluded that the aforesaid charges of non-compliance with RBI directions warranted imposition of monetary penalty,” the regulator further said.
Similarly, the RBI also imposed a penalty of Rs 1.2 crore on Karnataka Bank for non-compliance with central bank’s directions. This matter also relates with the inspections done by the regulator on March 2017 and March 2018. “This penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47A (1) (c) read with sections 46 (4) (i) and 51 (1) of the Banking Regulation Act, 1949 (the Act),” the RBI said.
This 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 bank with its customers, RBI further said in its order on Karnataka Bank.
The central bank has also imposed a penalty of Rs 30 lakh on Saraswat Cooperative Bank. “The RBI has imposed, by an order dated February 20, 2020, a monetary penalty of Rs 30 lakh on Saraswat Cooperative Bank for non-compliance with directions issued by the RBI on IRAC norms,” the central bank said.