RBI Imposes Monetary Penalty on Bank of India; Check Details

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs.70 lakh on the Bank of India for deficiencies in regulatory compliance.

As Per RBI Press Release:

The RBI has imposed a monetary penalty of Rs.70 lakh (Rupees Seventy lakh only) on the Bank of India. (the bank) for non-compliance with certain provisions of the ‘Reserve Bank of India – (Know Your Customer (KYC)) Direction, 2016’ and circular instructions on ‘Compliance Function in Banks’ issued by RBI by an order dated July 7, 2022. This penalty has been imposed in the exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with section 46 (4) (i) and Section 51 (1) of the Banking Regulation Act, 1949.

This action is based on regulatory compliance shortcomings and is not meant to rule on the legality of any deal or arrangement the bank has with its clients.

Background

The RBI conducted the bank’s statutory inspection for supervisory evaluation (ISE) in light of the bank’s financial situation as of March 31, 2019, and the review of the risk assessment report 2019, risk mitigation plan 2019, and all related correspondences pertaining to the same revealed, among other things, noncompliance with the aforementioned RBI directions to the extent the bank failed to assign Unique Customer Identification Code (UCIC) to a significant number of custodians. Further to that, a notice was sent to the bank asking it to provide justification as to why a fine should not be placed on it for failing to follow the given guidelines.

After taking into account the bank’s response to the notice and the oral arguments made during the in-person hearing, the RBI determined that the charge of non-compliance with the aforementioned RBI directions was substantiated and warranted imposition of a monetary penalty, to the extent of such non-compliance.