The Reserve Bank of India (RBI) has imposed monetary penalties on five banks including ICICI Bank and YES Bank for various instances of regulatory non-compliance. Here is all you need to know:
ICICI Bank Ltd.
The RBI has imposed a monetary penalty of ₹1 crore on ICICI Bank Ltd. for non-compliance with certain directions on ‘Loans and Advances – Statutory and Other Restrictions’. The Statutory Inspection for Supervisory Evaluation (ISE) 2022 of the bank revealed several lapses, including sanctioning term loans to certain entities without adequate due diligence and relying on budgetary resources for debt servicing. Despite the bank’s responses and additional submissions, the RBI found these charges warranted the imposition of the penalty. This action addresses deficiencies in regulatory compliance but does not affect the validity of any customer agreements.
Yes Bank Ltd.
Yes Bank Ltd. faced a penalty of ₹91 lakh for non-compliance with RBI directions on ‘Customer Service in Banks’ and ‘Unauthorized Operation of Internal/Office Accounts’. RBI had levied charges on accounts with insufficient balances and operating unauthorized internal accounts. This action focuses on regulatory compliance deficiencies and does not impact the validity of customer transactions.
The Gandhinagar Urban Co-operative Bank Ltd.
RBI has imposed a monetary penalty of ₹1 lakh on the Gandhinagar Urban Co-operative Bank Ltd., Gandhinagar, Gujarat, for non-compliance with directions on ‘Loans and Advances to Directors, Relatives, and Firms/Concerns in which they are Interested’. The statutory inspection as of March 31, 2023, revealed that the bank sanctioned or renewed loans with directors’ relatives as guarantors, violating RBI guidelines. The penalty addresses regulatory lapses without affecting the validity of customer transactions.
The Greater Bombay Co-operative Bank Ltd.
The Greater Bombay Co-operative Bank Ltd., Mumbai, received a penalty of ₹25 lakh for non-compliance with RBI directions on ‘Maintenance of Deposit Accounts – Primary (Urban) Co-operative Banks’. The bank was found to have levied flat-rate charges on savings bank deposit accounts for non-maintenance of minimum balance, contrary to the requirement for proportionate charges. The penalty was imposed after reviewing the bank’s submissions. This action focuses on compliance deficiencies without questioning the validity of any customer agreements.
Bharati Sahakari Bank Ltd.
RBI has imposed a monetary penalty of ₹20 lakhs on Bharti Sahakari Bank Ltd, Pune for non-compliance on ‘Frauds monitoring and reporting mechanism.’ RBI found that the bank had delayed reporting of a fraud in a current account. This action is based on deficiency in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
Commitment to Regulatory Compliance
The RBI’s actions are based on deficiencies in regulatory compliance and aim to reinforce the importance of adherence to banking regulations. These penalties are not intended to question the validity of transactions or agreements entered into by the banks with their customers. The central bank remains committed to ensuring that banks operate within the regulatory framework to maintain financial stability and protect consumer interests.
