The Reserve Bank of India (RBI) imposed a monetary penalty of ₹2.20 Crore (Rupees Two Crore and twenty Lakh only) on Indian Overseas Bank on June 2nd 2023 based on the order dated 29th May 2023.
The penalty was imposed on grounds of contravention of the provisions of Section 17(1) of the Banking Regulation Act, 1949 and non-compliance with certain directions issued by RBI on ‘Prudential Norms on Income Recognition, Asset Classification and Provisioning Pertaining to Advances – Divergence in NPA Accounts’,‘Reserve Bank of India (Interest Rate on Deposits) Directions, 2016’ and Advisory on ‘Man in the Middle (MiTM) Attacks in ATMs’.
This penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47A(1)(c) read with sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949. This action is based on the regulatory compliance deficiencies and is not meant to decide on the legality of any deal or arrangement the bank has with its clients.
The RBI has arrived at its conclusion that the accusations of contravention/non-compliance had been established and proposed the imposition of a financial penalty on the bank after hearing the notices and oral arguments of the bank.
The background is that the Supervisory Evaluation of the bank was conducted by RBI with reference to its financial position as on March 31, 2021. The examination of the Risk Assessment Report/Inspection Report pertaining to ISE 2021, revealed the contravention of the above mentioned provisions of the Act and non-compliance with the aforesaid directions by the bank.
The RBI pointed that the contraventions that the bank:
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