The Reserve Bank of India (RBI) in the first week of February 2019 imposed a monetary penalty on seven banks for non-compliance with various directions issued by the RBI on monitoring of end-use of funds, exchange of information with other banks, Know Your Customer (KYC) norms, etc.
The penalties were imposed in the exercise of powers under the provisions of Section 47A (1) (c) and Section 46 (4) (i) of the Banking Regulation Act, 1949, taking into account the failure of banks in adhering to the directions issued by RBI. Earlier in January 2019, the apex bank had imposed a monetary penalty on Axis Bank, Syndicate Bank, and UCO Bank for their non-compliance with directions contained in circulars of the RBI.
The Axis Bank and the UCO Bank were penalised to pay Rs 20 million for their non-compliance with Circular on ‘Collection of Account Payee Cheques – Prohibition on Crediting Proceeds to Third Party Account’ dated January 22, 2014 and Master Directions on ‘Frauds – Classification and Reporting by commercial banks and select FIs’ dated July 1, 2016.
On the other hand, the Syndicate Bank was imposed with the penalty of Rs 10 million for its non-compliance with ‘Master Circular on Frauds – Classification and Reporting’ of July 1, 2015, and ‘Circular on Risk Management Systems in Banks’ dated October 7, 1999.