RBI imposes Rs 36 lakh penalty on Central Bank of India, details here

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• Apr 22, 2022 | Dhupali Das

The RBI stated that it had sent the bank a notice advising it to show cause why a penalty should not be imposed for failing to comply with the said directions.

Digital Desk: The Reserve Bank of India (RBI) on Friday imposed a fine of Rs 36 lakh on public sector lender Central Bank of India for breaching customer protection norms, RBI announced. 

"The Reserve Bank of India (RBI) imposed a hefty fine of Rs 36 lakh on the Central Bank of India in an order dated April 18, 2022, for non-compliance with specific directions on 'Customer Protection –- limiting the liability of customers in unauthorised electronic banking transactions," the RBI said in a release.

The penalty was imposed in accordance with the provisions of the Banking Regulation Act of 1949, according to the regulator. "This action is based on regulatory compliance deficiencies and is not intended to pass judgement on the validity of any transaction or agreement entered into by the bank with its customers," it added.

RBI conducted a mandatory assessment to conduct a supervisory evaluation of the bank's financial position on March 31, 2020. The assessment disclosed non-compliance with the relevant instructions to the extent that the bank failed to credit (shadow reversal) the amount involved in the unauthorised electronic transaction to the customer's account within 10 working days of the customer's notification, RBI said. 

The regulator stated that it had sent the bank a notice advising it to show cause why a penalty should not be levied for failing to comply with the said instructions.

"After considering the bank's reply to the notice, oral submissions made in the personal hearing, and examination of additional submissions made by it, RBI came to the conclusion that the aforesaid 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," the release stated.