New Delhi:
The Reserve Bank of India (RBI) has imposed a fine of ₹1.45 crore on the public sector Central Bank of India for failing to comply with specific regulatory instructions related to ‘Loans and Advances’ and ‘Customer Protection’.
Non-Compliance Details
The RBI’s statutory inspection for Supervisory Evaluation (ISE 2022) conducted with reference to the financial position of Central Bank of India as of March 31, 2022,
revealed several lapses:
1) Loans and Advances
The bank sanctioned a working capital demand loan to a company against the subsidy amount received from the government. This action was found to be non-compliant with the RBI’s guidelines.
2) Customer Protection
The bank failed to deposit the amounts involved in certain unauthorized electronic transaction cases into the customers’ accounts within the stipulated time frame.
Upon issuing a notice to the bank,
the RBI considered the bank’s response and found the allegations of non-compliance to be valid, leading to the imposition of the fine.
Financial Performance Highlights
Despite the penalty, Central Bank of India reported strong financial performance in the fourth quarter of FY 2023-24:
Net Profit: Increased by 41% to ₹807 crore, up from ₹571 crore in the same quarter of the previous fiscal year.
Total Income: Rose to ₹9,699 crore in the quarter ending March 2024, compared to ₹8,567 crore in the same period last year.
Gross NPA: Improved to 4.5% of total loans, down from 8.44% a year ago.
Net NPA: Declined to 1.23% from 1.77% in the same quarter the previous year.
Additional Penalties
In a related development, the RBI also fined Sonali Bank PLC ₹96.4 lakh for non-compliance with various norms, including the KYC Direction of 2016.
RBI’s Stand on Penalties
The RBI clarified that the penalties imposed on both Central Bank of India and Sonali Bank PLC are based on deficiencies in regulatory compliance.
These penalties do not reflect the validity of any transactions or agreements made by the banks with their customers.
