RBI acts tough on delay in fraud reporting by banks, slaps penalty of Rs 5 crore on Karur Vyasa Bank
30 September, 2018
The Reserve Bank of India (RBI) has been acting tough against banks which do not follow the norms, especially against banks failing to report frauds. On Friday, the central bank announced that a penalty of Rs 5 crore has been imposed on Karur Vyasa Bank (KVB) for non compliance. This is the fourth bank that has been penalised in the month of September by the RBI.
In a statement issued on Friday, the RBI said that the penalty was slapped "for non-compliance with its directions on "Income Recognition and Asset Classification (IRAC) norms, reporting of frauds, and on the need for discipline at the time of opening of current accounts".
"This action is based on deficiencies 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," the statement added.
RBI said that the KVB failed to adhere to the directions issued by RBI. "This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949", the statement added.
Earlier this month, RBI had imposed a penalty of Rs 1 crore each on Union Bank of India, Bank of Maharashtra and Bank of India for delay in detection and reporting of fraud in some accounts.
RBI's tough policy on delay in reporting frauds comes after the Punjab National Bank failed to detect and report the Rs 13000 Nirav Modi scam.
In March and April this year, the central bank had imposed Rs 3 crore each penalty on IDBI Bank and Axis Bank respectively.
The spate of penalties indicates a tougher policy has been adopted by the RBI. The central bank has penalised 7 banks so far in 2018.
Earlier, RBI has cracked the whip on ICICI Bank (Rs 58.9 crore), Yes Bank (Rs 7 crore), and Airtel Payments Bank (Rs 5 crore).