RBI slaps penalty on Bank of Maharashtra
The Reserve Bank of India (RBI) has slapped a monetary penalty on Bank of Maharashtra.
The Reserve Bank of India (RBI) said on Friday it had slapped a monetary penalty on PSU lender Bank of Maharashtra. The penalty, amounting to Rs 1.27 crore, was over non-compliance with certain directions issued by the banking regulator on loan systems for delivery of bank credit, the cyber security framework in banks and know your customer norms, according to an official statement.
"This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of section 47A(1)(c) read with sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949," the banking regulator said.
Earlier, the RBI issued a show case notice to the PSU bank asking why the maximum penalty should not be imposed on it for its failure to comply with directions, after conducting certain inspections in 2023.
After considering the bank’s response, the RBI said it found that the bank:
- Failed to ensure that the minimum outstanding ‘loan component’ was, at least, the specified percentage of the sanctioned fund based working capital limit for certain borrowers
- Failed to implement a fraud risk management system across all delivery channels
- Had allotted multiple customer identification codes to certain customers instead of a Unique Customer ldentification Code (UCIC) for each customer,
- Had allowed operations in certain small accounts that did not meet the regulatory requirement
The regulator said the action is "based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transactions or agreement entered into by the bank with its customers".
The RBI also said that the imposition of the penalty is without prejudice to any other action that may be initiated by it against the bank.
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