Reserve Bank of India imposes monetary penalty on 36 banks
Reserve Bank of India

Reserve Bank of India imposes monetary penalty on 36 banks

March 11, 2019

Reserve Bank of India imposes monetary penalty on 36 banks

The Reserve Bank of India (RBI) has imposed, by orders dated January 31, 2019 and February 25, 2019, monetary penalty for non-compliance with various directions issued by RBI on time-bound implementation and strengthening of SWIFT-related operational controls on 36 banks as detailed below:

Sr. No.Name of the bankAmount of penalty
(in ₹ Million)
1.Bank of Baroda40
2.Catholic Syrian Bank Limited40
3.Citibank N.A.40
4.Indian Bank40
5.Karnataka Bank Limited40
6.BNP Paribas30
7.City Union Bank Limited30
8.Indian Overseas Bank30
9.UCO Bank30
10.Union Bank of India30
11.United Bank of India30
12.Allahabad Bank20
13.Bank of Maharashtra20
14.Canara Bank20
15.DCB Bank Limited20
16.Dena Bank20
17.Jammu & Kashmir Bank Limited20
18.Oriental Bank of Commerce20
19.Syndicate Bank20
20.Bank of America N.A.10
21.Barclays Bank Plc10
22.Central Bank of India10
23.Corporation Bank10
24.DBS Bank Limited10
25.Deutsche Bank A.G.10
26.Hongkong and Shanghai Banking Corporation Limited10
27.ICICI Bank Limited10
28.IDBI Bank Limited10
29.IndusInd Bank Limited10
30.JP Morgan Chase Bank N.A.10
31.Karur Vysya Bank Limited10
32.Punjab & Sind Bank10
33.Standard Chartered Bank10
34.State Bank of India10
35.Tamilnad Mercantile Bank Limited10
36.YES Bank Limited10

These penalties have been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949, taking into account failure of the above banks to adhere to the aforesaid directions issued by RBI. This action 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 banks with their customers.

Background

Shaktikanta Das,IAS
Mr Shaktikanta Das, Governor of the Reserve Bank of India

An assessment of compliance with RBI directions on implementation and strengthening of SWIFT-related operational controls of 50 major banks was carried out which revealed that banks had not complied with one or more of the major directions pertaining to (i) direct creation of payment messages in the SWIFT environment, (ii) implementation of Straight Through Processing (STP) between CBS/Accounting System and SWIFT system, (iii) ensuring that users entering/ passing/authorizing the transactions in CBS were different from those operating in SWIFT environment, (iv) independent reconciliation of logs generated from SWIFT with corresponding entry passed in the CBS/accounting system, (v) introduction of an additional layer of approval for all payment messages exceeding a particular threshold, and (vi) Nostro reconciliation on T+1/T+5 basis.

Based on the findings of the assessment and extent of non-compliance, Notices (SCNs) were issued to 49 banks advising them to show cause as to why penalty should not be imposed for non-compliance with directions issued by RBI as indicated therein. After considering the replies received from the banks, oral submissions made in the personal hearings, where sought by the banks, and examination of additional submissions, if any, RBI decided to impose monetary penalty on aforementioned 36 banks, based on the extent of non-compliance in each bank.

RBI will continue to closely monitor compliance with these controls on an ongoing basis.

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