In a recent development, the Reserve Bank of India (RBI) has imposed a penalty of Rs 2.92 crore on Canara Bank for violation of various norms. The penalty has been imposed for non-compliance with the central bank’s guidelines related to linking interest rates to external benchmark and opening savings accounts of ineligible entities.
As per the RBI’s statement, the penalty has been imposed after an inspection of the bank’s books of accounts, internal controls, compliance systems, and processes. The inspection revealed that Canara Bank had not complied with certain provisions of the RBI’s guidelines on interest rate transmission, which were aimed at improving the transparency and efficiency of the transmission mechanism.
Further, the inspection also found that the bank had opened savings accounts in the name of certain ineligible entities, which is a violation of the RBI’s Know Your Customer (KYC) guidelines. The central bank has directed the bank to take necessary steps to ensure compliance with the KYC guidelines in future.
“In furtherance to the same, notices were issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions, as stated therein,” the RBI said.
The RBI has also stated that the action against Canara Bank 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.
This penalty on Canara Bank comes in the wake of the RBI’s recent actions against other banks for non-compliance with regulatory guidelines. The central bank has been taking strict measures to ensure compliance with its guidelines to maintain the stability and integrity of the banking system.
Canara Bank has reportedly taken necessary measures to rectify the shortcomings identified by the RBI. The bank has stated that it is committed to ensuring compliance with regulatory guidelines and will continue to work towards strengthening its systems and processes to meet the expectations of its customers and stakeholders.
In conclusion, the penalty imposed by the RBI on Canara Bank highlights the importance of adherence to regulatory guidelines in the banking sector. The central bank’s strict actions against non-compliance are aimed at ensuring the stability and integrity of the banking system, and it is essential that all banks comply with the guidelines to maintain the trust and confidence of their customers.