RBI fines LVB, Syndicate Bank for non-compliance
15 Oct 2019
The Reserve Bank of India on Monday announced monetary penalties on private sector Lakshmi Vilas Ban and state-run lender Syndicate Bank for non-compliance with certain provisions of RBI directions.
In its order dated 14 October 2019, RBI imposed monetary penalty of Rs1 crore on Lakshmi Vilas Bank Ltd for non-compliance with certain provisions of directions issued by RBI on “Income Recognition and Asset Classification (IRAC) norms”.
RBI said the action is based on the 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.
RBI said a statutory inspection of the bank with reference to its financial position as on 31 March 2017 revealed, inter alia, non-compliance with directions issued by RBI on “Income Recognition and Asset Classification (IRAC) norms”.
Based on the inspection report, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the directions. After considering the bank’s reply to the notice and examination of additional submission, RBI concluded that the aforesaid non-compliance warranted imposition of monetary penalty.
By an order dated 14 October 2019, RBI also imposed a penalty of Rs75 lakh on Syndicate Bank for non-compliance with the directions issued by RBI on Frauds Classification and Reporting and Housing Sector: Innovative Housing Loan Products - Upfront disbursal of housing loans.
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 bank with its customers, RBI stated.
RBI said the return on fraud filed by the bank revealed that the bank had failed to comply with certain provisions of directions issued by RBI on fraud reporting and disbursal of housing loans. Based on the findings, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the directions issued by RBI. After considering the reply received from the bank and submissions made during the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.