RBI imposes Rs 36 lakh fine on Central Bank of India for violating customer protection norms

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RBI imposes Rs 36 lakh fine on Central Bank of India for violating customer protection norms

Reserve Bank on Friday said it has imposed a fine of Rs 36 lakh on public sector lender Central Bank of India for violating norms on customer protection. The Reserve Bank of India (RBI), by an order dated April 18, 2022, has imposed a monetary penalty of Rs 36 lakh on Central Bank of India for non-compliance with certain directions on ‘Customer Protection –- limiting liability of customers in ‘unauthorised electronic banking transactions’, RBI said in a release.

This penalty has been imposed under the provisions of the Banking Regulation Act, 1949, the regulator said. “This action is based on the 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,” it added.

RBI had conducted a statutory inspection for supervisory evaluation of the bank with reference to its financial position as on March 31, 2020. It revealed non-compliance with the relevant directions to the extent the bank failed to credit (shadow reversal) the amount involved in the unauthorized electronic transaction to the customer’s account within 10 working days from the date of notification by the customer, RBI said.

The regulator said it had sent a notice to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions.

“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 were substantiated and warranted imposition of monetary penalty, to the extent of non-compliance with such directions,” said the release.

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