RBI imposes ₹1.40 cr monetary penalty on Bank of India
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1.40 crore on Bank of India (BoI) for non-compliance with certain directions issued by it on ‘Interest Rate on Deposits’, ‘Customer Service in Banks’, ‘Interest Rate on Advances’, among others.
The aforementioned monetary penalty is also for non-compliance with certain directions issued by the central bank on ‘Central Repository of Information on Large Credits (CRILC) – Revision in Reporting’, and ‘Membership of Credit Information Companies (CICs)’ and contravention of provisions of Credit lnformation Companies Rules, 2006 (ClC Rules).
The RBI had conducted Statutory Inspection for Supervisory Evaluation (ISE) of the bank with reference to its financial position as on March 31, 2021 and March 31, 2022.
Non-compliance
Based on supervisory findings of non-compliance with regulatory instructions/statutory provisions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the instructions, RBI said in a statement.
After considering the bank’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI found that the charges against the bank were sustained warranting imposition of monetary penalty.
RBI flagged six instances of the Bank not complying with certain directions issued it, including not paying interest in certain term deposit accounts as per the schedule of interest rates disclosed in advance; levying SMS alert charges from customers based on invalid mobile numbers and not on actual usage basis; failing to reset interest rates in MCLR (marginal cost of funds based lending rate) and external benchmark linked advances at prescribed periodicity;
Further, the Bank failed to benchmark the interest on certain floating rate retail loans and floating rate loans to MSME, to an external benchmark rate; failed to report or inaccurately reported data pertaining to certain large borrowers to CRILC; and failed to furnish accurate information to CICs.
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Monetary penalty
“The action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transactions or agreement entered into by the bank with its customers,” the central bank said.
Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
Meanwhile, RBI imposed a monetary penalty of ₹29.55 lakh on Bandhan Bank for non-compliance with certain directions relating to Interest Rate on Deposits.
The central bank also imposed a monetary penalty of ₹13.60 lakh on Indostar Capital Finance for non-compliance with its directions on ‘Monitoring of Frauds in NBFCs and with certain provisions of ‘Know Your Customer (KYC)”.