RBI imposes Rs 84.50 lakh penalty on Central Bank of India

The RBI on Friday said it has imposed a penalty of Rs 84.50 lakh on Central Bank of India (the bank) for non-compliance with certain provisions of norms related to frauds classification and reporting.

The Reserve Bank had conducted statutory inspection for supervisory evaluation of the bank with reference to its financial position as on March 31, 2021.

Examination of the reports revealed that the public sector lender had failed to report as fraud to RBI certain accounts within seven days of decision of Joint Lenders' Forum (JLF) to declare the accounts as fraud.

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It had recovered SMS alert charges from its customers on flat basis rather than on actual usage basis.

The RBI had issued a notice to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the directions.

"After considering the bank's reply to the notice and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty...," the central bank said.

RBI, however, added the penalty 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.