Total fine amounts to Rs 95 crore in 7 months; ‘culprits’ include established names.


New Delhi: The Reserve Bank of India (RBI) imposed a fine of almost Rs 95 crore in the seven months between April and October 2021 on bank institutions across the country, including cooperative banks. The penalties were imposed for not complying with regulatory compliances, KYC deficiencies and delay in reporting data. Among the “culprits” are established names like State Bank of India (SBI), Bank of Baroda, Punjab National Bank, Axis Bank, HDFC, ICICI and Standard Chartered Bank.

In all, 106 instances of levying of monetary penalty were carried out by the RBI during the above said period. The majority of the institutions on whom the monetary fine was imposed are cooperative banks.

However, “big banks” like the State Bank of India (twice), Axis bank (twice), Standard Chartered, ICICI, HDFC, Punjab National Bank, Central Bank of India, Bank of Baroda and RBL, too, were penalized during the said time period for different lapses.

In the month of May a fine of Rs 10 crore was imposed on HDFC after the RBI was approached by a whistleblower who shared documents alleging irregularities in the matter of marketing and sale of third-party non-financial products to the bank’s customers. The RBI in its investigation found the allegations to be true after which the fine was imposed.

In the same month, ICICI had to pay a fine of Rs 3 crore for shifting of securities from one category to another in contravention of rules that were brought to the RBI’s notice by a correspondence. The Punjab National Bank (PNB) faced the ire of the RBI by way of Rs 2 crore fine in June for exercising delay in reporting of frauds and not ensuring data accuracy and integrity while submitting data to RBI.

In June, Axis Bank was imposed a fine of Rs 5 crore for contravention of directions issued by the RBI with regards to cyber security and classification and reporting of suspected transactions. In the same month, SBI was levied a fine of Rs 1 crore, along with other 13 banks, including Bank of Baroda (fine of Rs 2 crore), for non-compliance of banking regulations.

In August, Axis Bank was again fined Rs 25 lakh for failing to comply with banking rules. The RBI imposed a fine of Rs 1 crore again on SBI too for delaying in sharing reports related to banking fraud. Standard Chartered Bank, in the same month, was fined Rs 1.95 crore for multiple lapses including (i) failure to credit  the amount involved in the unauthorised electronic transactions, (ii) not reporting cyber security incident within the prescribed time period, (iii) authorising the direct sales agents (outsourced third party) to conduct KYC verification, and (iv) failure to ensure integrity and quality of data submitted in Central Repository of Information on Large Credits (CRILC) which was setup by the RBI in 2017 to collect, store, and disseminate credit data to lenders.

The imposition of fine, banking industry officials said, was being done by the RBI to minimize the risk of loan related and other frauds from the bank end. “However, unless and until the fine amount is increased drastically once it is confirmed that the rules were not followed, the banks will continue to adopt a lackadaisical approach. Fine of Rs 1 crore is nothing for banks. They pay the amount and move on. If that fine was Rs 20 crore, then the top authorities in the banks would have woken up and ensured that the officials concerned are taken to task and a system is put in place so that the same error is not repeated again,” an AGM level officer with the State Bank of India told The Sunday Guardian.