RBI enforces Rs 5 lakh fine on BoB

The Reserve Bank of India (RBI) on Wednesday imposed a penalty of Rs 5 lakh on Bank of Baroda for violation of the provisions of Banking Regulation Act, 1949. During the annual financial inspection, the central bank found that BoB had netted the items representing internal and external liabilities in the inter-branch accounts.

This resulted in underestimation of the outside liabilities for the purpose of computation of net demand and time liabilities and maintenance of cash reserve ratio/ statutory liquidity ratio, during the period from April 1999 to March 2002.

Following the observation, the RBI advised the bank to submit revised returns for the relevant period. Bank of Baroda sought exemption from it on grounds of basic constraint of inadequacy of accounting system in vogue at the relevant time. Subsequently, RBI issued a show cause notice to the bank in response to which the bank submitted a written reply.