RBI Slaps Rs 11-Cr Penalty on 4 Banks – CORPORATE ETHOS

RBI Slaps Rs 11-Cr Penalty on 4 Banks

By: | March 7, 2019

March 7: Karnataka Bank, United Bank of India, IOB and Karur Vysya Bank have been slapped with a penalty amounting to Rs 11 crore by the Reserve Bank of India. The banks have been fined for non-compliance of directions on Swift messaging software. FineA penalty of Rs 4 crore was imposed on Karnataka Bank while United Bank and Indian Overseas Bank were fined Rs 3 crore. Karur Vysya Bank was imposed on the lowest amount of Rs 1 crore.

Reports said Karnataka Bank was charged a fine of Rs 4 crore by RBI for the overdue in the execution of four of the Swift related operational controls.

In a regulatory filing, United Bank stated that the RBI has directed them to deposit a penalty fine of Rs 3 crore in 14 days. The fine is levied for contraventions and the non-compliance with the guidelines in the RBI circular on time-bound execution and establishment of Swift-related functions.

Indian Overseas Bank said for the non-compliance with the directions issued on February 20, 2018, RBI has charged them with a penalty of Rs 3 crore. To avoid the repetition of the same, the bank has taken various actions to avoid such happenings.

Karur Vysya also announced that the bank has levied a fine of Rs 1 crore for the same reasons stated by the other banks.

The RBI circular addresses ‘Time-bound implementation and strengthening of Swift-related operational controls’.

The international messaging software Swift is used by various financial companies for transactions. The fraud of Rs 14,000 crore at PNB was the misuse of the messaging software Swift. The fraud was brought to light in February 2018, post which RBI was strict on all kinds of transactions of the banks.

On March 2 four banks including SBI, Union Bank of India, Dena Bank, and IDBI informed the exchanges that they were levied fine for the same issue regarding for non-compliance with various directions.

Union Bank and Dena Bank were fined Rs 3 crore and Rs 2 crore respectively. Both IDBI and the SBI were charged Rs 1 crore each.