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RBI to levy penalty on banks for violating customer info sharing norms

By Religare
RBI to levy penalty on banks for violating customer info
The Reserve Bank of India (RBI), on Wednesday, said that lenders failing to comply with norms on 'sharing customer information among themselves' will have to face penalty from January 1, 2013.

The move, which has been aimed at keeping a check on the rising NPAs, will require banks to share information relating to credit, derivatives and unhedged foreign currency exposures among themselves.

For that, the central bank has asked the lenders to develop a proper information sharing mechanism by the end of this year, and any new loan sanctioned after January 1, 2013 should be done only after obtaining necessary information.

"It has been observed that of late the NPAs and restructured loans of banks have been increasing significantly. A major reason for deterioration in the asset quality of banks is the lack of effective information sharing among banks," the central bank said.

RBI cited the lack of adequate information sharing among banks would help significantly reduce the frauds in the system.

"Non-adherence to the above instructions by banks would be viewed seriously by the Reserve Bank and they would be liable to action, including imposition of penalty, wherever considered appropriate," RBI added.

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