Axis Bank and Indian Overseas Bank were penalized by India’s monetary body Reserve Bank of India (RBI). Axis Bank was penalized Rs3 crore for violation of NPA classification norms while Indian Overseas Bank was charged Rs2 crore for not complying with the KYC regulations.
RBI had carried out an inspection of private sector player Axis Bank on which its financial position was asked as on March 31, 2016. In a statement, the central bank said,” The inspection, inter alia, revealed “violations of various regulations issued by RBI in the assessment of non-performing assets (NPA)”
RBI also added,” The RBI has imposed, on February 27, 2018, a monetary penalty of Rs 30 million on Axis Bank Limited for non-compliance with the directions issued by RBI on Income Recognition and Asset Classification (IRAC) norms.”
For the Indian Overseas Bank, the RBI released a separate release of fraud detection in one of the bank’s branch. While imposing a penalty of Rs2 crore, It said,” The examination of the documents, including the bank’s internal inspection report, revealed, inter alia, non-compliance with the directions issued by RBI on Know Your Customer (KYC) norms.”
“Based on the documents, a notice was issued to the bank advising it to show cause as to why the penalty should not be imposed for non-compliance with directions issued by the RBI. After considering the bank’s reply, oral and written submissions made in the personal hearing, as also the additional information and documents furnished, the RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions/ guidelines were substantiated and warranted imposition of monetary penalty.”
RBI said that the action was taken on the deficiencies in regulatory compliance and “is not intended” to pronounce upon the validity of any transaction or agreement entered into by the banks with customers.