By an order dated 11-06-2024, the Reserve Bank of India (‘RBI’) imposed a monetary penalty of Rs. 1,45,50,000 on the Central Bank of India for non-compliance with certain directions issued by the RBI on ‘Loans and Advances — Statutory and Other Restrictions’ and ‘Customer Protection — Limiting Liability of Customers in Unauthorized Electronic Banking Transactions’.
Background
A statutory inspection for Supervisory Evaluation (ISE 2022) of the Central Bank was conducted by RBI with reference to its financial position on 31-03-2022.
After providing a show-cause notice, RBI found that the charges against the Central Bank were sustained and warranted the imposition of a monetary penalty.
The charges against the Central Bank were:
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It sanctioned a working capital demand loan to a Corporation against amounts receivable from the Government by way of subsidies.
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It failed to credit (shadow reversal) the amount involved in a few instances of unauthorized electronic transactions to the customers’ account within 10 working days from the date of notification by the customer, resolve complaints, and provide compensation to certain customers within 90 days from the date of receipt of complaint.
RBI further clarified that this action was based upon deficiencies in regulatory compliance and does not relate to the validity of any transaction or agreement entered into by the Central Bank with its customers.
