RBI penalises Axis Bank, IOB for violating NPA, KYC norms

The Reserve Bank of India on Monday said it has imposed a penalty of Rs3 crore on Axis Bank for violation of Non-Performing Asset (NPA) classification norms, and Rs2 crore on Indian Overseas Bank for not complying with Know Your Customer (KYC) regulations.

The central bank said it had carried out a statutory inspection of the private sector Axis Bank with reference to its financial position as on 31 March 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 Rs30 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 regulator 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", RBI said, while imposing the Rs2 crore 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 bank with its customers.

NPAs in the banking system have crossed the staggering level of Rs 8.5 lakh crore, of which state-run banks account for Rs7.5 lakh crore.

Last month, the banking system was rocked with the baring of an alleged Rs12,600 crore fraud on state-run Punjab National Bank by jeweller Nirav Modi and his uncle Mehul Choksi.