RBI Slaps Rs 1.45 Cr Monetary Penalty On Central Bank of India For Non-Compliance

The Central Bank of India received a penalty of Rs 1.45 crore from the Reserve Bank of India (RBI) for failing to comply with certain directives that the RBI had given, the central bank said on June 14.

"The Reserve Bank of India (RBI) has, by an order dated June 11, 2024 imposed a monetary penalty of Rs 1,45,50,000 (Rupees One Crore Forty Five Lakh Fifty Thousand only) on Central Bank of India (the bank) for non-compliance with certain directions issued by RBI on 'Loans and Advances - Statutory and Other Restrictions' and 'Customer Protection - Limiting Liability of Customers in Unauthorised Electronic Banking Transactions'," said RBI in a statement.

"The bank (i) sanctioned a working capital demand loan to a Corporation against amounts receivable from Government by way of subsidies, and (ii) failed to credit (shadow reversal) the amount involved in a few instances of unauthorised electronic transaction to the customer's account within 10 working days from the date of notification by the customer and resolve complaints and provide compensation to certain customers within 90 days from the date of receipt of such complaints," are the charges against the bank were sustained, warranting imposition of monetary penalty by RBI.

With regard to the bank's financial status as of March 31, 2022, the RBI performed the Statutory Inspection for Supervisory Evaluation (ISE 2022).

"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. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the banK," stated the central bank in a statement.

Meanwhile, the Reserve Bank of India (RBI) fined Sonali Bank PLC Rs 96.40 Lakh on June 14, 2024, for failing to comply with the RBI's 2016 "Reserve Bank of India (Know Your Customer (KYC)) Directions" and its June 10, 2024 order regarding the "Time-bound implementation and strengthening of SWIFT - related operational controls."
By order dated June 14, 2024, the Reserve Bank of India (RBI) revoked the licence of "Purvanchal Co-operative Bank Ltd., Ghazipur, Uttar Pradesh." Consequently, as of June 15, 2024, at business closure, the bank will no longer be conducting banking operations.

The Reserve Bank cancelled the licence of the bank as the Purvanchal Co-operative Bank does not have adequate capital and earning prospects, the bank has failed to comply with the requirements of Sections 22(3) (a), 22 (3) (b), 22(3)(c), 22(3) (d) and 22(3)(e) of the Banking Regulation Act, 1949, the continuance of the bank is prejudicial to the interests of its depositors, the bank with its present financial position would be unable to pay its present depositors in full; and Public interest would be adversely affected if the bank is allowed to carry on its banking business any further, according to the central bank.

Additionally, an order for the winding up of the bank and the appointment of a liquidator has been requested from the Uttar Pradesh Registrar of Cooperative Societies and Commissioner for Cooperation.