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RBI slaps Rs 4 cr penalty on Citibank for non-compliance of regulations
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SME Times News Bureau | 30 May, 2020
The Reserve Bank of India (RBI) has imposed a fine of Rs 4 crore on Citibank for non-compliance of regulations.
In
a statement issued on Friday, the RBI said the penalty has been imposed
on Citibank N.A. for violation of banking regulations related to
customer credentials.
According to the central bank, Citibank had
not complied with the directions issued by the RBI on obtaining
declaration from customers about credit facilities enjoyed with other
banks, granting non-fund based facilities to non-constituent borrowers,
verifying data available in CRILC database and obtaining no-objection
certificate (NOC) from lending banks at the time of opening current
accounts, and submission of compliance to risk assessment findings.
"This
penalty has been imposed in exercise of powers vested in RBI under the
provisions of Section 47 A (1) (c) read with Section 46 (4) (i) of the
Act, taking into account the failure of the bank to adhere to the
aforesaid provision of the Act and the directions issued by RBI. This
action is based on 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.
The
RBI said that the statutory inspection of the Indian operations of the
bank with reference to its financial positions as on March 31, 2017 and
March 31, 2018 and the Risk Assessment Reports (RARs) pertaining thereto
revealed, inter-alia, contravention with the provisions of the Act and
non-compliance with the concerned directions of the central bank.
In
furtherance to the same, a notice was issued to the bank advising it to
show-cause as to why penalty should not be imposed for contravention of
the provisions of the Act and failure to comply with the directions
issued by the RBI.
"After considering the bank's reply to the
notice, oral submissions made during the personal hearing and
examination of additional submissions, the RBI concluded that the
aforesaid charges of contravention with the provisions of the Act and
non-compliance with RBI directions warranted imposition of monetary
penalty," it said.
Further, the apex bank has also imposed
penalty on three co-operative banks -- Nagar Urban Co-operative Bank
Ltd., Ahmednagar, TJSB Sahakari Bank Limited and Bharat Co-operative
Bank (Mumbai) for non-compliance with various directions issued by it.
It
has imposed a fine of Rs 60 lakh on Bharat Co-operative Bank for
non-compliance with the norms on income recognition, asset
classification and reporting of frauds.
Similarly, fines of Rs 40
lakh and Rs 45 lakh have been imposed on Nagar Urban Co-operative Bank
and TJSB Sahakari Bank, respectively.
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