RBI imposed Rs.4.5 Crore Monetary Penalty on Axis Bank, J&K Bank and 1 Other for Rules Violation

The Reserve Bank of India (RBI) imposed Rs.4.5 Crore monetary penalty on three private and public sector lenders for non-compliance with certain directions issued by RBI. The Lenders are Axis Bank, Jammu & Kashmir Bank and Bank of Maharahtra.

RBI has imposed a monetary penalty of Rs.2,50,00,000/- on Jammu and Kashmir Bank Limited (the bank) for non-compliance with certain directions issued by RBI on ‘Creation of a Central Repository of Large Common Exposures-Across Banks’, read with ‘Central Repository of Information on Large Credits (CRILC) – Revision in Reporting’, ‘Loans and Advances – Statutory and other Restrictions’ and ‘Time-bound implementation and strengthening of SWIFT-related operational controls’, by an order dated June 22, 2023. This penalty was levied in accordance with the powers granted to the RBI under sections 47 A (1) (c) and 46 (4) (i) of the Banking Regulation Act of 1949.

Monetary penalty of Rs.1.45 Crore has been imposed on Bank of Maharashtra for non-compliance with certain directions issued by RBI on ‘Loans and Advances – Statutory and Other Restrictions’ and Advisory on ‘Man in the Middle (MiTM) Attacks in ATMs’ (the Advisory). This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of section 47 A (1) (c) read with sections 46 (4) (i) and 51 (1) of the Banking Regulation Act, 1949. This action is based on regulatory compliance problems and is not intended to rule on the legitimacy of any transaction or agreement entered into by the bank with its clients.

Axis Bank also levied by monetary penalty of Rs.30.00 Lakh for non-compliance with certain provisions of the RBI directions on ‘Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – Credit Card Accounts’. This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of section 47 A (1) (c) read with section 46 (4) (i) of the Banking Regulation Act, 1949.

In Axis Bank case, RBI conducted the bank’s Statutory Inspection for Supervisory Evaluation (ISE 2021) based on its financial situation as of March 31, 2021. The examination of the Risk Assessment Report/Inspection Report pertaining to ISE 2021, as well as all related correspondence, revealed, among other things, that the bank had levied penal charges in certain accounts for late payment of credit card dues, despite the fact that the customers had paid the dues by the due date, via third party platforms. In addition, a notice was given to the bank instructing it to show cause why a penalty should not be levied for failing to comply with the orders provided by the RBI, as mentioned therein.