RBI imposes Rs 30 lakh penalty on Karur Vysya Bank

MUMBAI: The RBI on Friday said it has imposed a penalty of Rs 30 lakh on Karur Vysya Bank for non-compliance with certain provisions related to fraud classification and reporting by commercial banks.

In a statement, the Reserve Bank said a Select Scope Inspection (SSI) of the bank was conducted by it from February 21, 2022, to March 4, 2022.

An examination of the SSI report and all related correspondence pertaining to the same revealed that the bank failed to report a few accounts as frauds to the RBI within a week of the respective Joint Lenders' Forum (JLF) decisions to do so, the central bank said.

In furtherance to the same, a notice was issued to Karur Vysya Bank, advising it to show cause as to why a penalty should not be imposed on it for failure to comply with the directions issued by the RBI.

After considering the bank's reply, oral submissions and additional submissions made by the bank, the RBI came to the conclusion that the charge of non-compliance with the directions was substantiated and warranted the imposition of a monetary penalty.

The RBI, however, added that the penalty 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.