RBI imposes Rs 50 lakh penalty on Central Bank of India for non-compliance

The Reserve Bank on Tuesday said it has imposed a penalty of Rs 50 lakh on state-run Central Bank of India for non-compliance with its directions on disbursal of some housing loans.

"Reserve Bank of India (RBI) has, by an order dated November 10, 2020, imposed a monetary penalty of Rs 50 lakh" on the bank for non-compliance with certain provisions contained in the circular on 'Housing Sector- Innovative Housing Loan Products - Upfront disbursal of housing loans' dated September 3, 2013, it said in a statement.

Giving details, it said an off-site examination of the records pertaining to some housing loans disbursed by the bank was conducted by RBI.

The examination and related documents revealed non-compliance with the directions issued by RBI, it said.

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, oral submissions made in the personal hearings and examination of additional submissions, RBI concluded that the charges of non-compliance with the aforesaid directions were substantiated and warranted imposition of monetary penalty," RBI said.

RBI, however, added 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.