RBI imposes Rs. 30 Lac penalty on Axis Bank for Non-Compliance with directions on 'Prudential Norms on Income Recognition'
RBI imposes penalty on Axis Bank for Non-Compliance with directions on ‘Prudential Norms on Income Recognition – TAXSCAN
RBI imposes penalty on Axis Bank for Non-Compliance with directions on ‘Prudential Norms on Income Recognition – TAXSCAN
The Reserve Bank of India (RBI) has imposed Rs. 39 lakhs penalty on Axis Bank, one of the top banks in India. According to the RBI, the axis bank didn’t comply with the certain provisions of the directions issued by the RBI on ‘Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – Credit Card Accounts’.
The Prudential Norms for revenue recognition, asset classification, and provisioning were combined in a Circular that the RBI released on April 1, 2023. These regulations are intended to improve the uniformity and openness of the public accounts of banks for advanced portfolios.
The norms aid in providing an accurate depiction of the financial health of banks by ensuring that income recognition, asset classification, and provisioning are based on objective criteria, which in the end fosters a secure banking system.
The RBI examined the bank's financial situation as of March 31, 2021, as part of the Statutory Inspection for Supervisory Evaluation (ISE) 2021. The Risk Assessment Report/Inspection Report for ISE 2021 and all correspondence in that regard were examined, and it was discovered, among other things, that the bank had assessed penalties in some accounts for late payment of credit card dues even though the customers had paid the dues through third-party platforms by the due date.
Further to that, a notice was sent to the bank asking it to provide justification for not facing a fine for failing to follow the instructions given by the RBI, as stated in the notice.
The RBI determined that the charge of non-compliance with the aforementioned RBI directions was substantiated and warranted imposition of a monetary penalty on the bank, to the extent of non-compliance with such directions, after taking into account the bank's response to the notice, oral arguments made during the personal hearing, and additional submissions made by it.
To Read the full text of the Order CLICK HERE
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