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Indian central bank slaps 111M rupee penalties on 9 banks

The Reserve Bank of India, or RBI, penalized seven local banks for non-compliance with certain of its provisions.

The monetary penalties were issued following a scrutiny in the accounts of the companies of an unnamed group.

The affected banks include Allahabad Bank and Bank of Maharashtra which were fined 20 million rupees each, in addition to Bank of Baroda, Bank of India, Indian Overseas Bank, and Union Bank of India, which were fined 15 million rupees each.

Oriental Bank of Commerce received a penalty of 10 million rupees.

According to the central bank, the penalized banks failed to comply with its provisions including code of conduct for opening and operating current accounts; opening of current accounts by banks - need for discipline; discounting/ rediscounting of bills by banks; Reserve Bank of India (frauds classification and reporting by commercial banks and select financial institutions) directions 2016; end use of funds – monitoring; and deposits on balance sheet date.

Separately, RBI penalized Corporation Bank with a 10 million rupee fine for non-compliance with the cyber security framework in banks, and frauds classification and reporting by commercial banks and select financial institutions provisions. The decision came after the bank submitted a report of cyber crime security incident about a fraudulent transaction using a cancelled debit card.

Swarna Bharathi Sahakara Bank Niyamitha, Bengaluru, was also fined for non-compliance with the directions of central bank for the collection of third party account payee checks. The bank was ordered to pay a fine of one million rupees after the central bank received complaints and carried out a scrutiny to reveal that the bank had been collecting third party account payee checks drawn in favor of members of credit societies for amounts exceeding 50,000 rupees, an action which breaches the directions issued by the central bank.

As of Aug. 2, US$1 was equivalent to 69.69 Indian rupees.