Before imposing the penalties, the RBI had sent notices to the three banks, advising them to provide reasons why penalties should not be imposed for their failure to comply with the issued directions.
Mumbai : The Reserve Bank of India (RBI) has imposed monetary penalties on three prominent private and public sector lenders for non-compliance with certain directions. On June 22nd, the central bank charged Jammu & Kashmir Bank with a penalty of ₹2.5 crore, Bank of Maharashtra with a fine of ₹1.45 crore, and Axis Bank with the least penalty amounting to ₹30 lakh.
Jammu & Kashmir Bank faced a penalty of ₹2.5 crore for its failure to comply with specific RBI directions concerning the creation of a Central Repository of Large Common Exposures-Across Banks, along with regulations regarding the Central Repository of Information on Large Credits (CRILC), Loans and Advances, and SWIFT-related operational controls. The RBI's inspection revealed several instances of non-compliance by J&K Bank, including the submission of compromised data to CRILC, granting term loans without conducting proper due diligence, and creating financial/non-financial messages in SWIFT without ensuring proper reflection in the CBS (core banking system). As a consequence, J&K Bank's share price on the BSE closed at ₹56.50 apiece, experiencing a decline of 2.99%.
Bank of Maharashtra, a government-owned bank, was penalized with ₹1.45 crore for non-compliance with RBI directions related to Loans and Advances and the Advisory on Man in the Middle (MiTM) Attacks in ATMs. The bank was found to have sanctioned a term loan to a corporation, disregarding the use of budgetary resources and failing to assess the viability and bankability of the projects adequately. Additionally, Bank of Maharashtra failed to implement required control measures for ATMs regarding end-to-end encryption within the stipulated timeframe. Consequently, the bank's share price on the BSE closed at ₹27.16 apiece, marking a decrease of 2.09%.
Axis Bank, a leading private sector lender, incurred a penalty of ₹30 lakh for non-compliance with RBI directions on Prudential Norms on Income Recognition, Asset Classification, and Provisioning pertaining to Advances - Credit Card Accounts. The RBI's inspection revealed that Axis Bank had levied penal charges on certain accounts for late payment of credit card dues, despite customers having paid on time through third-party platforms. Axis Bank's share price on the BSE slid by 0.7% to ₹958.30 apiece.
Before imposing the penalties, the RBI had sent notices to the three banks, advising them to provide reasons why penalties should not be imposed for their failure to comply with the issued directions. After reviewing the banks' responses, the RBI concluded that the charge of non-compliance was substantiated, justifying the imposition of monetary penalties.
The penalties imposed by the RBI highlight the importance of adherence to regulatory guidelines and the need for financial institutions to maintain compliance with RBI directives. These actions aim to ensure the stability and integrity of India's banking system, promoting transparency and protecting the interests of customers and stakeholders.
Mumbai : The Reserve Bank of India (RBI) has imposed monetary penalties on three prominent private and public sector lenders for non-compliance with certain directions. On June 22nd, the central bank charged Jammu & Kashmir Bank with a penalty of ₹2.5 crore, Bank of Maharashtra with a fine of ₹1.45 crore, and Axis Bank with the least penalty amounting to ₹30 lakh.
Jammu & Kashmir Bank faced a penalty of ₹2.5 crore for its failure to comply with specific RBI directions concerning the creation of a Central Repository of Large Common Exposures-Across Banks, along with regulations regarding the Central Repository of Information on Large Credits (CRILC), Loans and Advances, and SWIFT-related operational controls. The RBI's inspection revealed several instances of non-compliance by J&K Bank, including the submission of compromised data to CRILC, granting term loans without conducting proper due diligence, and creating financial/non-financial messages in SWIFT without ensuring proper reflection in the CBS (core banking system). As a consequence, J&K Bank's share price on the BSE closed at ₹56.50 apiece, experiencing a decline of 2.99%.
Bank of Maharashtra, a government-owned bank, was penalized with ₹1.45 crore for non-compliance with RBI directions related to Loans and Advances and the Advisory on Man in the Middle (MiTM) Attacks in ATMs. The bank was found to have sanctioned a term loan to a corporation, disregarding the use of budgetary resources and failing to assess the viability and bankability of the projects adequately. Additionally, Bank of Maharashtra failed to implement required control measures for ATMs regarding end-to-end encryption within the stipulated timeframe. Consequently, the bank's share price on the BSE closed at ₹27.16 apiece, marking a decrease of 2.09%.
Axis Bank, a leading private sector lender, incurred a penalty of ₹30 lakh for non-compliance with RBI directions on Prudential Norms on Income Recognition, Asset Classification, and Provisioning pertaining to Advances - Credit Card Accounts. The RBI's inspection revealed that Axis Bank had levied penal charges on certain accounts for late payment of credit card dues, despite customers having paid on time through third-party platforms. Axis Bank's share price on the BSE slid by 0.7% to ₹958.30 apiece.
Before imposing the penalties, the RBI had sent notices to the three banks, advising them to provide reasons why penalties should not be imposed for their failure to comply with the issued directions. After reviewing the banks' responses, the RBI concluded that the charge of non-compliance was substantiated, justifying the imposition of monetary penalties.
The penalties imposed by the RBI highlight the importance of adherence to regulatory guidelines and the need for financial institutions to maintain compliance with RBI directives. These actions aim to ensure the stability and integrity of India's banking system, promoting transparency and protecting the interests of customers and stakeholders.
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