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RBI imposes Monetary Penalty on Central Bank of India


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The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 1.45 crore on Central Bank of India. This penalty has been imposed because the bank failed to comply with certain directions issued by the RBI. The central bank made this announcement on June 14.

According to an RBI press release, the Central Bank of India sanctioned a working capital demand loan to a Corporation against amounts receivable from the Government in the form of subsidies. This action was in violation of the RBI’s directions.

Additionally, the bank failed to credit the amount involved in unauthorized electronic transactions to the customer’s account within 10 working days from the date of notification by the customer. This also goes against the RBI’s guidelines.

Furthermore, the bank failed to resolve complaints and provide compensation to certain customers within 90 days from the date of receipt of such complaints. The RBI stated these reasons for imposing the penalty on the bank.

The RBI conducted a Statutory Inspection for Supervisory Evaluation of the bank with reference to its financial position as of March 31, 2022. Based on the findings of non-compliance with RBI directions and related correspondence, a notice was issued to the bank. The bank was given an opportunity to show cause as to why a penalty should not be imposed on it for its failure to comply with the directions.

After reviewing the bank’s reply to the notice, the RBI found that the charges against the bank were sustained, warranting the imposition of a monetary penalty.

It is important to note that the action taken by the RBI is based on deficiencies in regulatory compliance. The penalty is not intended to determine the validity of any transactions or agreements entered into by the bank with its customers.

The RBI emphasized that the imposition of the monetary penalty does not prejudice any other actions that may be initiated by the RBI against the bank.

Monetary Penalty Imposed on Sonali Bank Plc

In a separate press release, the RBI announced that it has imposed a penalty of Rs 96.4 lakhs on Sonali Bank Plc. Sonali Bank is a foreign bank originally based in Bangladesh.

Similar to the case with Central Bank of India, the RBI conducted a statutory inspection of Sonali Bank with reference to its financial position as of March 31, 2022. The RBI also carried out an IT examination of the bank in March 2022.

During the investigations, the RBI found several violations of norms by Sonali Bank. The bank had failed to implement a system of periodic review of risk categorization of accounts. Additionally, the bank did not have a robust software in place to alert them of transactions inconsistent with risk categorization and updated customer profiles.

Furthermore, Sonali Bank failed to implement certain SWIFT-related operational controls within the stipulated timelines and did not become a member of all the Credit Information Companies (CICs) within the required timeframe.

The RBI has imposed this penalty on Sonali Bank due to these violations, reflecting its commitment to maintaining regulatory compliance in the banking sector.

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