RBI Imposes ₹2.92 Crore Penalty On Canara Bank For Non-Compliance
| Category | RBI News Updates |
| Published | 14 May 2023 |
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹2.92 crore on Canara Bank for non-compliance with several directions issued by the RBI. The penalty is based on deficiencies in regulatory compliance and does not question the validity of any transactions or agreements made by the bank. The action follows a Statutory Inspection for Supervisory Evaluation conducted by the RBI in relation to the bank's financial position as of March 31, 2021.
In July 2020, RBI initiated a scrutiny of Canara Bank following a high-value fraud reported by another bank. The examination of the Risk Assessment Report and related correspondences revealed multiple instances of non-compliance with RBI directions. These included:
- Failure to link interest on floating rate retail loans and loans to MSME to an external benchmark.
- Failure to link interest on floating rate rupee loans sanctioned and renewed during the financial year 2020-21 to the Marginal Cost of Lending Rate (MCLR).
- Opening of savings deposit accounts in the name of ineligible entities.
- Registration of dummy mobile numbers in several credit card accounts.
- Failure to pay any interest on deposits accepted under the daily deposit scheme and prematurely withdrawn within 24 months of opening the accounts.
- Recovery of SMS alert charges from customers without considering actual usage.
- Failure to undertake ongoing customer due diligence and implement robust software for generating alerts when transactions were inconsistent with customer profiles.
Subsequently, the RBI issued notices to Canara Bank, asking the bank to show cause as to why a penalty should not be imposed for non-compliance with the aforementioned directions.
After reviewing the bank's responses to the notices and considering oral submissions during the personal hearing, the RBI concluded that the charge of non-compliance with the directions was substantiated and warranted the imposition of a monetary penalty.
Conclusion
The RBI has imposed a penalty of ₹2.92 crore on Canara Bank for its failure to comply with various directions issued by the RBI. This penalty is a result of deficiencies in regulatory compliance identified during scrutiny of the bank's operations. It is important to note that the penalty does not question the validity of any transactions or agreements made by the bank.