The RBI said the penalty is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
The RBI observed that the bank failed to link the interest on floating rate retail loans and loans to MSMEs to an external benchmark.
The Reserve Bank of India on Friday said it has imposed a penalty of Rs 2.92 crore on Canara Bank for violation of various norms, including linking of interest rates to external benchmarks and opening of savings accounts of ineligible institutions.
The Reserve Bank of India (RBI) conducted a statutory inspection for supervisory assessment of the bank with reference to its financial position as on March 31, 2021.
“The bank was investigated by the RBI on the basis of a high value fraud reported by another bank in July 2020,” the central bank said in a statement.
After probing, the RBI observed that the bank failed to link the interest on floating rate retail loans and loans to MSMEs to an external benchmark and to calculate the interest on floating rate rupee loans sanctioned and renewed during the financial year 2020-21. Also failed to link marginal cost. Lending Rate (MCLR).
The public sector lender, the RBI said, opened several savings deposit accounts in the name of ineligible entities, registered dummy mobile numbers in several credit card accounts, and failed to pay any interest on deposits accepted under the daily deposit scheme and on time. Before 24 months of account opening.
The RBI also said that the bank charged SMS alert fees from customers, not based on actual usage, and failed to conduct ongoing due diligence on customers and generate alerts when transactions inconsistent with customer profiles occurred. Strong software is used.
“In pursuance of the same, notices were issued to the bank to show cause why penalty should not be imposed on it for failure to comply with the said directions as stated therein,” RBI said.
After considering the bank’s replies to the notices and oral submissions made during the personal hearing, RBI said that it has come to the conclusion that the allegation of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty.
However, the RBI said that the penalty on Canara Bank 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.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed)
