RBI imposes Monetary Penalty on Karur Vysya Bank; Check Details

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs.30 lakh (Rupees Thirty lakh only) on Karur Vysya Bank Ltd. (the bank) for non-compliance with certain provisions of the Reserve Bank of India (Frauds- Classification and reporting by commercial banks and select FIs) directions 2016, by an order dated March 21, 2023.

This penalty was imposed by the RBI in accordance with the provisions of sections 47 A (1) (c) and 46 (4) (i) of the Banking Regulation Act of 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.

The RBI conducted a Select Scope Inspection (SSI) of the bank between February 21, 2022 and March 4, 2022. An assessment of the SSI report and all accompanying correspondence indicated that the bank neglected to disclose a few accounts as fraudulent to the RBI within a week of the corresponding Joint Lenders’ Forum (JLF) orders to do so. In addition, a notice was given to the bank instructing it to show cause why a penalty should not be levied on it for failing to comply with the orders provided by the RBI, as indicated therein.

After considering the bank’s reply to the notice, oral submissions made during the personal hearing and additional submissions made by it, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank, to the extent of non-compliance with such directions.