Rs 3 cr fine imposed on Lakshmi Vilas Bank for contravention of RBI rules

Complaint against the bank was made regarding irregularities in bill discounting and purchasing

Reserve Bank on Friday said it has imposed a penalty of Rs 3 crore on Lakshmi Vilas Bank for contravention of instructions on opening and operation of current accounts, among others.

The penalty on the bank, RBI said, has been imposed for "contravention of instructions" relating to opening and operation of current accounts, extending bill discounting facilities to non-constituents and walk-in customers and non-adherence to KYC norms.

The RBI, however, added that the action on the bank 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 and its customers."

Earlier, the Reserve Bank had received a complaint regarding irregularities in bill discounting and purchasing at one of the bank's branches.

An examination of the irregularities was subsequently conducted and an explanation from the bank was also obtained by the RBI.

On the basis of the examination of RBI and explanation furnished by the bank, a show cause notice was issued to the bank for violation of certain regulations and instructions.

After considering the bank's reply, as also, personal submissions, information submitted and documents furnished, the RBI said, it came to the conclusion that the violations were substantiated and warranted imposition of monetary penalty.