RBI imposes Rs 2.9 Crore Penalty on Canara Bank
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The Reserve Bank of India (RBI) on Friday, May 12, imposed a penalty of Rs 2.92 crore on Canara Bank for non-compliance with certain provisions of directions issued by the central bank.
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, the RBI said in a statement.
The statutory inspection for supervisory evaluation (lSE) of the bank was conducted by RBI with reference to its financial position as on March 31, 2021. A scrutiny of the bank was carried out by RBI in July 2020 based on a high-value fraud reported by another bank, it noted.
Examination of the risk assessment report, the scrutiny report, and all related correspondences pertaining to the same revealed that the bank failed to link interest on floating rate retail loans and loans to MSME to an external benchmark.
Also, the bank failed to link interest on floating rate rupee loans sanctioned and renewed during the financial year 2020-21 to its marginal cost of lending rate (MCLR), opened several savings deposit accounts in the name of ineligible entities and registered dummy mobile numbers in several credit card accounts.
Further, it failed to pay any interest on deposits accepted under the daily deposit scheme and prematurely withdrawn within 24 months of opening of the accounts, recovered SMS alert charges from customers, not on an actual usage basis, and failed to undertake ongoing customer due diligence and put into use robust software for generating alerts when transactions were inconsistent with the customer profile.
After considering the bank's replies to the notices 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, to the extent of non-compliance with such directions, it added.
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, the RBI said in a statement.
The statutory inspection for supervisory evaluation (lSE) of the bank was conducted by RBI with reference to its financial position as on March 31, 2021. A scrutiny of the bank was carried out by RBI in July 2020 based on a high-value fraud reported by another bank, it noted.
Examination of the risk assessment report, the scrutiny report, and all related correspondences pertaining to the same revealed that the bank failed to link interest on floating rate retail loans and loans to MSME to an external benchmark.
Also, the bank failed to link interest on floating rate rupee loans sanctioned and renewed during the financial year 2020-21 to its marginal cost of lending rate (MCLR), opened several savings deposit accounts in the name of ineligible entities and registered dummy mobile numbers in several credit card accounts.
Further, it failed to pay any interest on deposits accepted under the daily deposit scheme and prematurely withdrawn within 24 months of opening of the accounts, recovered SMS alert charges from customers, not on an actual usage basis, and failed to undertake ongoing customer due diligence and put into use robust software for generating alerts when transactions were inconsistent with the customer profile.
After considering the bank's replies to the notices 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, to the extent of non-compliance with such directions, it added.
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