The Reserve Bank of India has slapped a penalty amounting to a total of Rs 6.50 crore on Bank of India, Karnataka Bank, and Saraswat Cooperative Bank.
The Reserve Bank of India has slapped a penalty amounting to a total of Rs 6.50 crore on Bank of India, Karnataka Bank, and Saraswat Cooperative Bank. The central bank said that Bank of India, a public lender incorporated in 1906, has been fined for non-compliance with certain provisions, including income Recognition, Asset Classification and Provisioning pertaining to advances – divergence in NPA accounts along with classification and reporting of frauds and has been fined Rs 5 crore. Karnataka Bank has been fined Rs 1.20 crore and Saraswat Cooperative Bank will have to pay Rs 30 lakh to the central bank.
RBI said that it had inspected Bank of India in 2017 and 2018 where it found non-compliance with the RBI directions. “In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the directions,” RBI said. After considering the Bank of India’s reply RBI concluded that the charges of non-compliance warranted an imposition of a fine on the Bank.
Karnataka Bank, a private lender with assets over Rs 79,000 crore stands accused of not following the RBI’s rules on Prudential Norms on Income Recognition, Asset Classification and Provisioning Pertaining to Advances – Divergence in NPA Accounts and Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances, according to the RBI release. Karnataka Bank was also asked by the Central Bank to present its side after an inspection in 2017 and 2018, after which the fine has been imposed. “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,” the Reserve Bank said.
Saraswat Cooperative Bank has been asked to pay Rs 30 lakh crore by the RBI for not abiding by the Income Recognition and Asset Classification (IRAC) norms through an order dated February 20. RBI said it had inspected the Bank in March 2018 after which the Bank’s reply was sought on the charges before imposing the monetary penalty on the cooperative lender.