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Business EconomyPosted at: Feb 7 2025 6:19PM


RBI fines Federal Bank, Karur Vysya Bank for non-compliance to directions

New Delhi, Feb 7 (UNI) The Reserve Bank of India (RBI) has imposed a monetary penalty on two private lenders – Federal Bank and Karur Vysya Bank Limited for non-compliance with certain directions on “Interest Rate on Deposits” in case of Federal Bank and “Loan System for Delivery of Bank Credit” in case of second Bank.
A monetary penalty of Rs 27.30 lakh has been imposed on Federal Bank Limited while the Karur Vysya Bank get a penalty of Rs 8.30 lakh, the RBI said in a notification on its website on Friday.
The statutory Inspection for Supervisory Evaluation of the Federal Bank was conducted by RBI with reference to its financial position as on March 31, 2023. Based on the supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.
After considering the bank’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found that the following charge against the bank was sustained, warranting imposition of monetary penalty.
“The bank had opened certain savings deposit accounts in the name of ineligible entities”, the RBI said in its penalty notice.
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. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
Similarly, the Statutory Inspection for Supervisory Evaluation of the Karur Vysya Bank was conducted by RBI with reference to its financial position as on March 31, 2023. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.
“The bank failed to ensure that the outstanding ‘loan component’ was at least the specified percentage of the sanctioned fund based working capital limit for certain borrowers,” the RBI said in the penalty notice.
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Tags: #RBI fines Federal Bank# Karur Vysya Bank for non-compliance to directions
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