The Reserve Bank of India (RBI) has recently imposed a penalty of Rs 36 lakh on both IDBI Bank and Citibank. The fines were issued for non-compliance with certain regulatory requirements related to financial transactions.
For IDBI Bank, the penalty was imposed because the bank failed to conduct proper due diligence when processing inward remittances from a foreign currency account. In simple terms, this means that the bank did not follow the required procedures to ensure the legitimacy of the funds being transferred into India.
On the other hand, Citibank N.A. was fined Rs 36.28 lakh for failing to comply with the directions related to the Liberalized Remittance Scheme (LRS). This scheme allows individuals to send money from India to foreign countries for various purposes, such as education, travel, or medical treatment. Citibank did not correctly report some transactions under this scheme, which led to the fine.
Both banks were penalized due to deficiencies in their compliance with regulatory rules. However, the RBI clarified that these penalties do not affect the validity of any transactions or agreements made by the banks with their customers.
The fines emphasize the importance of strict adherence to RBI guidelines and ensuring proper procedures are followed to maintain financial transparency and security in banking operations.
