RBI Imposes Monetary Penalty Of Rs 1.12 Cr On Bank Of Maharashtra For Non-Compliance

On April 25, 2022, the Reserve Bank of India (RBI) in a press release said it has imposed a monetary penalty of Rs 1.12 crore on the Bank of Maharashtra, a state-run bank, for non-compliance.

The monetary penalty has been imposed for violation of provisions related to Know Your Customer (KYC), creation of a Central Repository of Large Common Exposures - Across Banks, and guidelines on managing risks and code of conduct in outsourcing of financial services by banks.

This penalty has been imposed in the exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with sections 46 (4) (i) and 51 (1) of the Banking Regulation Act, 1949 (the Act).

According to the press release, "The examination of the Risk Assessment Report & Inspection Report pertaining to the ISE, scrutiny reports, and all the correspondence related to the same, revealed, inter-alia, non-compliance with the aforesaid directions issued by RBI to the extent the bank (i) failed to allot Unique Customer Identification Codes (UCIC) to its individual customers, (ii) failed to ensure integrity and quality of data submitted to RBI in CRILC, and (iii) did not enter into any Service Level Agreement (SLA) and failed to review the outsourcing arrangement for one of the outsourced financial services."

The RBI's action is based on the 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.