RBI penalizes Indian Overseas Bank of Rs. 57.50 lakh for non compliance of RBI (Frauds Classification and Reporting by Commercial Banks and Select FIs Directions, 2016

Reserve Bank of India

On 24-06-2022 the Reserve Bank of India (‘RBI’) imposed a penalty of Rs.57.50 lakh on the Indian Overseas Bank (‘The Bank’) for not complying to the directions given by RBI under the provisions of Section 47-A(1) (c) read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.

The Bank did not comply with the Reserve Bank of India (Frauds Classification and Reporting by Commercial Banks and Select FIs Directions, 2016, ‘Creation of a Central Repository of Large Common Exposures – Across Banks’ read with ‘Central Repository of Information on Large Credits (CRILC) — Revision in Reporting’ and ‘Prudential Framework for Resolution of Stressed Assets’, and ‘External Benchmark Based Lending’

On 31-03-2020, a supervisory evaluation was conducted by RBI including risk assessment and inspection which revealed the following non-compliance of the Bank:

  1. Failure to report frauds involving ATM cards- which has to be reported to the RBI within 3 weeks from the date of detection

  2. Failure to ensure integrity and quality of data when it did not report credit information to Central Repository of Information on Large Credits (‘CRILC’)

  3. Linked certain floating rate loans to Micro and Small Enterprises, extended by it on or after 1-10-2019 to MCLR/Base Rate instead of an external benchmark

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