RBI Slaps Rs5.96 Crore Penalty on J&K Bank, Canara Bank, BoI and Datson Exports for Regulatory Lapses
Moneylife Digital Team 27 January 2025
Reserve Bank of India (RBI) has slapped a penalty of Rs5.96 crore on Jammu and Kashmir Bank Ltd (J&K Bank), Canara Bank, Bank of India (BoI) and Datson Exports Ltd, a non-banking financial company (NBFC) for non-compliance with directions by the regulator. The highest penalty of Rs3.31 crore has been imposed on J&K Bank.
 
Canara Bank was fined Rs1.63 crore, BoI received a penalty of Rs1 crore and West Bengal-based Datson Exports was penalised Rs1 lakh.
 
J&K Bank has been fined for failing to comply with RBI directions on financial inclusion which include: providing access to banking services, offering basic savings bank deposit accounts (BSBDA), adhering to know-your-customer (KYC) requirements and following regulations related to loans, advances, and other statutory restrictions.
 
RBI statutory inspection found several issues with J&K Bank's practices. The lender also allowed certain BSBDA holders to open savings bank deposit accounts. It failed to identify the beneficial owners when opening accounts for certain legal entities which were not natural persons. Additionally, J&K Bank allowed transactions in small accounts that did not meet regulatory requirements. The lender also sanctioned a working capital demand loan to a corporation, which was backed by subsidies receivable from the government, RBI says.
 
Canara Bank was fined for failing to comply with RBI directions on priority sector lending targets and classification, interest rates on deposits and financial inclusion, particularly concerning access to banking services through BSBDA.
 
RBI discovered that Canara Bank had charged loan-related fees on certain priority sector loans up to Rs25,000. Additionally, the public sector bank (PSB) did not pay interest on specific savings bank deposit accounts. Furthermore, it was found that the lender was maintaining both savings bank deposit accounts and BSBDA for the same customers simultaneously.
 
Further, the statutory inspection conducted by RBI to assess the supervisory evaluation of BoI, with reference to its financial position as of 31 March 2023, revealed that the PSB failed to transfer the required amounts to the depositor education and awareness fund (DEA Fund) within the prescribed timeframe. 
 
Datson Exports was fined for failing to comply with RBI's guidelines on risk management and the code of conduct for outsourcing financial services by NBFC. RBI discovered that the company had outsourced one of its decision-making functions, specifically the loan sanctioning process, to its digital lending application (DLA) partner.
 
In all four cases, RBI said penalties are based on deficiencies in regulatory compliance and are not intended to pronounce on the validity of any transaction or agreement they entered into with their customers.
Comments
srkanna73
2 months ago
When will RBI fine two repeated violators inspite of several court orders and RBI guidelines both Equitas bank and Cholamandalam investment & finance. Manipulating interest, charging usurious interest, visitation charges, unimaginable charges, foreclosure charges and suppressing facts and filing sarfesai act and taking possession. Justice is due. Will RBI, Supreme court, Consumer council, Finance ministry please look into the matter. Running pillar to post for justice. Cholamandalam staff mocking to DRT, CJM, Ombudsman every officer a plumpy purse thrown to shut their mouth and turn blind eye. Justice is due desperately.
srkanna73
2 months ago
When will RBI fine two repeated violators inspite of several court orders and RBI guidelines both Equitas bank and Cholamandalam investment & finance. Manipulating interest, charhing
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