RBI Imposes ₹84.50 Lakh Penalty on Central Bank of India for Non-Compliance with Fraud Reporting Norms

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On Friday, the Reserve Bank of India (RBI) announced that it has fined the Central Bank of India (the bank) a penalty of ₹84.50 lakh. This penalty was imposed due to the bank’s failure to comply with certain regulations concerning the classification and reporting of frauds.

The RBI conducted a routine inspection to evaluate the bank’s financial position as of March 31, 2021. During the examination of the reports, it was discovered that the bank had not promptly reported certain accounts as fraud to the RBI within seven days of the Joint Lenders’ Forum (JLF) decision to declare those accounts as fraudulent. Additionally, the bank had charged its customers for SMS alerts based on a flat rate rather than the actual usage, which was a non-compliant practice.

After reviewing the bank’s response to the notice and considering the arguments presented during the personal hearing, the RBI concluded that the bank had indeed failed to comply with the aforementioned directions and therefore imposed a monetary penalty. It’s important to note that this penalty is solely based on deficiencies in regulatory compliance and does not pass judgment on the validity of any transactions or agreements entered into by the bank with its customers.

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