The Reserve Bank of India has imposed a penalty of Rs 3 crore on Axis Bank for violation of NPA classification norms and Rs 2 crore on Indian Overseas Bank for not complying with the KYC regulations.
The central bank said it had carried out a statutory inspection of private sector player Axis Bank with reference to its financial position as on March 31, 2016. The inspection, inter alia, revealed “violations of various regulations issued by RBI in the assessment of non-performing assets (NPA)”,the central bank said in a statement.
“The RBI has imposed, on February 27, 2018, a monetary penalty of Rs 30 million on Axis Bank Limited for non-compliance with the directions issued by RBI on Income Recognition and Asset Classification (IRAC) norms,” it said. Regarding the state-owned Indian Overseas Bank, the RBI said in a separate release that a “fraud was detected” in one of the branches of the bank. “The examination of the documents, including the bank’s internal inspection report, revealed, inter alia, non-compliance with the directions issued by RBI on Know Your Customer (KYC) norms,” the RBI said, while imposing the Rs 2 crore penalty on IOB.
“Based on the documents, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with directions issued by the RBI. After considering the bank’s reply, oral and written submissions made in the personal hearing, as also the additional information and documents furnished, the RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions/ guidelines were substantiated and warranted imposition of monetary penalty,” the RBI said about the penalty on IOB.
The RBI said the action on the two banks 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 customers.