RBI Penalizes Central Bank of India with Rs 84.50 Lakh Fine

The Reserve Bank of India (RBI) said on Friday that it has imposed a penalty of Rs 84.50 lakh on the Central Bank of India (the bank) for failing to comply with certain requirements of regulations relating to fraud classification and reporting.

The Reserve Bank conducted a required inspection to undertake a supervisory examination of the bank's financial status as of March 31, 2021.

According to the allegations, the public sector lender failed to notify fraud to the RBI within seven days following the Joint Lenders' Forum (JLF) decision to designate the accounts fraudulent.

It had collected SMS alert charges from its consumers on a set rate rather than on an individual basis.

The RBI had sent a notice to the bank, requesting that it demonstrate why a penalty should not be levied for failing to comply with the rules.

"After considering the bank's reply to the notice and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty...," the central bank said.

However, the RBI stressed that the penalty is based on regulatory compliance shortcomings and is not intended to judge the legitimacy of any transaction or arrangement entered into by the bank with its clients.