RBI Slaps Rs82 Lakh Penalty on City Union Bank and Ocean Capital Market for Regulatory Violations
Moneylife Digital Team 27 February 2024
Reserve Bank of India (RBI) has imposed a Rs82 lakh penalty on City Union Bank Ltd and Ocean Capital Market Ltd, a non-banking financial company (NBFC), for violating various rules and regulations. 
City Union Bank has been penalised with Rs66 lakh for non-compliance with directions issued by RBI on prudential norms on income recognition, asset classification and provisioning pertaining to advance- divergence in non-performing asset (NPA) accounts and know your customer (KYC).
RBI conducted the statutory inspections for the supervisory evaluation (ISE) of City Union Bank concerning its financial position as of 31 March 2022. 
"The examination of the risk assessment report (RAR), inspection report (IR) pertaining to ISE 2022 and all related correspondence revealed non-compliance with the directions by City Union Bank to the extent there was a significant divergence between the NPAs, as reported by it and as assessed during the inspection, and it did not put in place a system of periodic review of risk categorisation of accounts of its customers," RBI says.
Ocean Capital Market, the NBFC from Odisha, was penalised Rs16 lakh for non-compliance with provisions of the NBFC- systemically important non-deposit-taking company and deposit-taking company and specific directions issued by RBI to the company, on submission of returns on XBRL platform.
The NBFC had delayed the submission of several returns on the XBRL platform, breached exposure limits on lending or investments in respect of single borrowers and single groups of borrowers and did not constitute various committees of the board.
"After considering the reply and oral submissions of both the banks during the personal hearing, RBI concluded that the charges of non-compliance with directions were substantiated and warranted imposition of monetary penalty," the central bank says.
In both the cases, RBI said penalties are based on deficiencies in regulatory compliance and are not intended to be pronounced upon the validity of any transaction or agreement they entered into with their customer.
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