The Reserve Bank of India has imposed a penalty on two leading lenders namely IDBI Bank and Citibank by Rs 36.30 lakh. While IDBI Bank was penalised due to violation of Foreign Currency Account guidelines, Citibank faced a penalty for contravention of directions under the Liberalized Remittance Scheme. The penalty on IDBI Bank was higher by Rs 2,000 than Citibank.
IDBI Bank Penalty:
In a notification, RBI revealed that they imposed a penalty on IDBI Bank to the tune of Rs 36,30,000/- (Rupees Thirty-Six Lakhs Thirty Thousand only), in exercise of powers vested in the Reserve Bank under the provisions of Section 11(3) of FEMA, 1999, for not undertaking due diligence while processing the inward remittances from a Foreign Currency Account opened by a constituent, resulting in contravention of Section 10 (4) of FEMA, 1999.
According to RBI, it had issued a Show Cause Notice to the bank, in response to which the bank submitted a written reply and also made oral submissions thereon. After considering the facts of the case and the bank's reply in the matter, the Reserve Bank of India came to the conclusion that the violations were substantiated and warranted imposition of penalty.
"This 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," RBI said.
IDBI Bank Ltd., today, is operating as a full service universal bank that serves the customers from all segments.
The lender's net profit improved by 31% in Q3 of FY 2025 to ₹1,908 crore as against net profit of ₹1,458 crore in Q3 of FY 2024. Net Interest Income improved by 23% in Q3 of FY 2025 to ₹4,228 crore as against ₹3,435 crore in Q3 of FY 2024. Also, Gross NPA ratio improved to 3.57% as on December 31, 2024 as against 4.69% as on December 31, 2023.
By end of December quarter, IDBI Bank has total deposits of Rs.2,82,439 crore, YoY growth of 9%. While net advances were at Rs.2,06,807 crore, YoY growth of 18%.
Citibank Penalty:
In case of Citibank, the penalty was amounted to Rs 36,28,000/- (Rupees Thirty-Six Lakhs Twenty Eight Thousand only), in exercise of powers vested in the Reserve Bank under the provisions of Section 11(3) of FEMA, 1999, for contravention of the directions issued by the Reserve Bank of India related to reporting of transactions undertaken under the Liberalized Remittance Scheme.
Just like IDBI Bank, RBI issued a Show Cause Notice to the bank, in response to which the bank had submitted a written reply and had also made oral submissions during a personal hearing thereon. After considering the facts of the case and the bank's reply in the matter, the Reserve Bank of India has come to the conclusion that the contraventions were substantiated and warranted imposition of penalty, under the FEMA, 1999.
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