RBI has imposed a penalty of Rs 2.20 crore on public sector Indian Overseas Bank. The bank has failed to comply with the provisions relating to prudential norms on income recognition, asset classification and advances.
RBI Action: The Reserve Bank of India often takes strict decisions against the bank for violating the rules. A few weeks back, the RBI had imposed a fine of Rs 84.50 lakh on the Central Bank. In May, the Central Bank had also imposed penalty on several co-operative banks. RBI has imposed a penalty of Rs 2.20 crore on public sector Indian Overseas Bank for non-compliance with certain rules related to income recognition and other lapses in regulatory compliance.
RBI pointed out that IOB has failed to comply with prudential norms on income recognition, asset classification and provisions relating to advances. The statutory inspection for supervisory evaluation of the bank as on March 31, 2021 revealed that the bank failed to make the minimum mandatory transfer of an amount equal to 25% of the declared profit for the year 2020-21 to its reserve fund. Also the bank offered interest rates applicable to senior citizens on deposits of non-individual constituents in certain cases. Apart from this, the bank also failed to take control measures of end-to-end encryption of connected ATMs.
The Center served a show cause notice to the bank and after its response, decided to impose monetary penalty. This decision of RBI will not affect the customers. The penalty has been imposed on the bank under the provisions of section 47A(1)c read with section 46(4)(i) and 51(1) of the Act. The Central Bank has given this information by issuing a report.
