The Reserve Bank of India (RBI) has made a significant decision regarding the Central Bank of India, resulting in a hefty penalty.
RBI has imposed a fine of Rs 84.50 lakh on the public sector Central Bank of India (CBI) for non-compliance with certain provisions related to fraud classification and reporting norms.
This decision will have far-reaching consequences for millions of customers associated with the bank.
Non-compliance with Fraud Reporting Norms
During a statutory inspection for supervisory assessment of the bank’s financial position as of March 31, 2021, RBI discovered that the bank failed to report a fraud to the regulatory authority within seven days of declaring the accounts of the Joint Forum of Lenders (JFL) as fraudulent.
Such non-compliance with fraud reporting norms has led to the imposition of the penalty.
Flat Charges for SMS Alerts
Furthermore, the scrutiny of the inspection report revealed another violation by the bank. Instead of charging customers for SMS alerts based on actual usage, the bank imposed flat charges. This practice does not align with the required standards and regulations.
Previous Penalties and Cancellations
This is not the first instance where RBI has taken strict actions against banks. In the fiscal year 2022-23, eight co-operative banks had their licenses canceled due to non-compliance with regulations.
Additionally, RBI imposed penalties on these banks 114 times for various rule violations. Co-operative banks have played a vital role in expanding banking services in rural areas.
However, the emergence of irregularities within these banks has necessitated drastic measures by RBI to maintain stability and trust in the banking sector.
Cancellation of Licenses:
- Mudhol Co-operative Bank
- Milath Co-operative Bank
- Shri Anand Co-operative Bank
- Rupee Co-operative Bank
- Deccan Urban Co-operative Bank
- Lakshmi Co-operative Bank
- Sewa Vikas Co-Operative Bank
- Babaji Date Mahila Urban Bank
As RBI continues to take decisive actions against non-compliant banks, the financial landscape is undergoing necessary scrutiny and improvements.
The penalties imposed on Central Bank of India and other co-operative banks serve as a reminder of the importance of adhering to regulatory guidelines to maintain the integrity of the banking system and safeguard customer interests.
