RBI puts up a fine of Rs. 84.50 lakhs on the Central Bank of India

BusinessRBI puts up a fine of Rs. 84.50 lakhs on the Central...

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On Friday, 26 May 2023, the Reserve Bank of India announced that it has levied a fine of Rs. 84.50 lakhs on the Central Bank of India. This is due to non-compliance with particular provisions of norms that are associated with fraud classification and reporting. The RBI had held a statutory check for supervisory evaluation of the bank related to its financial position as of 31st March 2021.

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After the reports were examined, it was found that the public sector bank didn’t report certain accounts as fraud to the Reserve Bank of India within a time span of seven days of decisions of the Joint Lenders’ Forum – JLF that mandates the declaration of accounts as fraud. The Central Bank of India also recovered SMS alert fees from its bank customers on a flat basis and not on the basis of actual usage.

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The RBI thus, released a notice to the bank wherein it advised the bank to show cause the reason for not imposing a fine on it as the bank had failed to agree with the directions. The RBI also mentioned how the central bank considers the bank to be liable for a monetary penalty after hearing the oral submissions and reading the response to the notice during the personal meeting with the bank officials. 

However, the RBI added that the penalty is depended on the lack of the bank to follow the regulatory norms and it is not related to the bank’s transaction or agreement with its customers.

For the unversed, the Central Bank of India – CBI is the public sector bank of India located in Mumbai. Despite having the name called Central Bank, the bank is not really the central bank of India. The Indian central bank is the Reserve Bank of India – RBI.

In the past also in the 1980s, the managers of the London branches of the Central Bank of India, Punjab National Bank, and Union Bank of India were found to be involved in a fraud in which they gave suspicious loans to a Bangladeshi jute trader Rajender Singh Sethia. This is when the regulatory officials in England and India all came together to compel all three Indian banks to shut down their London branches.

The Central Bank of India was set up on 21 December 1911 by Sir Sorabji Pochkhanawala. Sir Pherozeshah Mehta was appointed as the Chairman. In 1969, the government of India gave the bank its nationalized status on 19 July, along with 13 others. The Central Bank of India is the first commercial Indian bank that is wholly owned and operated by Indians. The Central Bank of India is one of the 12 public sector banks in India to have done recapitalization in 2009.

As of 31st March 2021, the Central Bank of India has an area of 4,608 branches, 3644 ATMs, 10 satellite offices, and one extension counter. It has a presence all over India covering 28 states of the country. 

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