Latest News

RBI imposed Rs 1.63 Crore Penalty on Canara Bank, Know Why


➡️ Click here to join our Whatsapp Group

The Reserve Bank of India (RBI) has imposed a fine of ₹1,63,60,000 on Canara Bank for failing to follow several key regulatory guidelines. The order, issued on January 7, 2025, identifies lapses in compliance with rules related to Priority Sector Lending, Interest Rates on Deposits, and Financial Inclusion initiatives, particularly concerning Basic Savings Bank Deposit Accounts (BSBDA).

Reasons for the Penalty

The penalty comes after the RBI conducted its Statutory Inspection for Supervisory Evaluation (ISE 2023), which reviewed Canara Bank’s financial position as of March 31, 2023. During this inspection, the RBI found several instances where the bank failed to comply with its guidelines.

Following the inspection, the RBI issued a notice to the bank, asking it to explain why a penalty should not be imposed. After reviewing the bank’s written response, additional documents, and oral submissions during a personal hearing, the RBI concluded that Canara Bank had committed the following violations:

  1. Priority Sector Loans: The bank charged fees on certain small Priority Sector loans of up to ₹25,000, which is against RBI rules.
  2. Savings Account Interest: The bank failed to pay interest on some Savings Bank Deposit accounts, a mandatory requirement.
  3. Duplicate Accounts: The bank allowed customers to hold both Savings Bank Deposit accounts and Basic Savings Bank Deposit (BSBD) accounts simultaneously, which violates financial inclusion norms.

The penalty has been imposed under Section 47A(1)(c), read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949. The RBI clarified that the fine is related to regulatory deficiencies and does not affect the validity of any transactions or agreements between the bank and its customers.

Key Takeaways

This action highlights the RBI’s commitment to ensuring that banks adhere to established regulations, especially those related to customer welfare and financial inclusion. While the penalty addresses these specific violations, the RBI noted that further action could be taken against Canara Bank if deemed necessary.

The move serves as a reminder to financial institutions about the importance of strict compliance with RBI directives, particularly in areas that directly impact customers and promote equitable access to banking services.

Leave a Reply

Your email address will not be published. Required fields are marked *