Open Access Research Article
A STUDY ON PENALTY IMPOSED BY RESERVE BANK OF INDIA ON MEMBER BANKS CRUX OF MY FINDINGS OF STUDY ON MAJOR NON-COMPLIANCE /VIOLATIONS/ DEVIATIONS IN RESPECT OF RBI GUIDELINES & BANKING REGULATION ACT (By- Parthasarathi Loganathan)
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Article Details
A STUDY ON PENALTY IMPOSED BY RESERVE BANK OF INDIA ON MEMBER BANKS CRUX OF MY FINDINGS OF STUDY ON MAJOR NON-COMPLIANCE /VIOLATIONS/ DEVIATIONS IN RESPECT OF RBI GUIDELINES & BANKING REGULATION ACT
Authored By- Parthasarathi Loganathan
As on date RBI under the provisions of Section 46 &
47 of the Banking Regulation Act, 1949, has imposed
Rs.19496.01.
Lakhs as penalty
on account of various violations and non-compliance of Regulatory
and Statutory guidelines by member banks and financial institutions over the
last five years on 551 occasions. Date-wise extraction of penalties imposed on member banks is
enclosed in the Annexure:
CALENDAR YEAR-WISE BREAK UP
|
YEAR
|
OCCASIONS
|
AMOUNT
|
|
2022
|
68
|
773.97
|
|
2021
|
170
|
5511.64
|
|
2020
|
44
|
1682.02
|
|
2019
|
154
|
4352.08
|
|
2018
|
73
|
5134.20
|
|
2017
|
42
|
2042.10
|
|
TOTAL
|
551
|
19496.01
|
SECTOR-WISE BREAK UP
|
BANKING SECTOR
|
PENALTY
|
OCCASIONS
|
|
Co-operative Sector Banks
|
2787.78
|
314
|
|
Foreign Banks
|
1211.00
|
15
|
|
Gold Loan Institutions
|
33.00
|
13
|
|
Nationalized Banks
|
4159.80
|
81
|
|
Payment & Settlement Banks
|
1300.00
|
9
|
|
Private Sector Banks
|
7607.50
|
65
|
|
Remittance Institutions
|
57.46
|
2
|
|
State Bank of India
|
1050.00
|
7
|
|
Non Banking Financial
Corporation(NBFCs)
|
1289.47
|
45
|
|
TOTAL
|
19496.01
|
551
|
(SOURCE : RBI-PRESS RELEASE DATA)
Findings On Major Non-Compliance/Violations
1. Know Your Customer
(KYC)
2. Strengthening the controls of Payment Ecosystem
between sponsored banks
and Select Financial
Institutions.
3. Cyber Security
Framework in Banks
4. Sanctioning of loans to Directors/Entities in which
they are interested
5. Prohibiting Acceptance of Fresh Deposits
6. Operational Guidelines on Depositor Education Awareness Fund Scheme
7. Exposure Norms and Statutory and other restrictions for UCBs
8. Supervisory Action
Framework
9. Information System Security Audit and
Internal Audit Compliance.
10. Management of Advances including Housing Finance
11. Income Recognition, Asset Classification, Provisioning Interest
Rate on Deposits.
12. Frauds – classification, monitoring and reporting by commercial banks, UCBs, NBFCs and select
FIs”
13. Non Systemically important non-deposit taking company.
14. Master Direction on Issuance and Operation of Prepaid Payment Instruments.
15.
‘Customer Protection–Limiting Liability
of Customers in Unauthorised Electronic Banking Transactions’.
16. ‘Placement of Deposits
with Other Banks by Primary (Urban) Co-operative Banks (UCBs).
CONCLUSION:
It is high time that Reserve Bank of India
addresses the above violations and deviations/non-compliance by strengthening the technology framework
in the banking industry within the extant statutory guidelines. Huge penalty amounts collected
so far could be exclusively utilized to improve the existing Regulatory and Supervisory framework.
An Expert Committee is the need of the hour comprising of
seasoned bankers, technocrats and lawyers to
study and evaluate the Economic feasibility and technical viability and
create a technological infrastructure so that all these critical
violations and non-compliance are minimized and build up a robust
banking industry for the
future.
P. Loganathan Advocate & Researcher
Ex-Banker
Article Information
A STUDY ON PENALTY IMPOSED BY RESERVE BANK OF INDIA ON MEMBER BANKS CRUX OF MY FINDINGS OF STUDY ON MAJOR NON-COMPLIANCE /VIOLATIONS/ DEVIATIONS IN RESPECT OF RBI GUIDELINES & BANKING REGULATION ACT (By- Parthasarathi Loganathan)
Author Name: Parthasarathi Loganathan
Title: A STUDY ON PENALTY IMPOSED BY RESERVE BANK OF INDIA ON MEMBER BANKS CRUX OF MY FINDINGS OF STUDY ON MAJOR NON-COMPLIANCE /VIOLATIONS/ DEVIATIONS IN RESPECT OF RBI GUIDELINES & BANKING REGULATION ACT
Email Id: lawyerlogan@gmail.com
- Journal IJLRA
- ISSN 2582-6433
- Published 2022/06/08
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International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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