RBI Imposes Monetary Penalty On Lakshmi Vilas Bank And Syndicate Bank For Violating Norms

The Reserve Bank of India (RBI) has, by an order dated October 14, 2019, imposed monetary penalty of ₹ 1 crore on The Lakshmi Vilas Bank Ltd. (the bank) for non-compliance with certain provisions of directions issued by RBI on Income Recognition and Asset Classification (IRAC) norms. The statutory inspection of the bank with reference to its financial position as on March 31, 2017 revealed, inter alia, non-compliance with directions issued by RBI on Income Recognition and Asset Classification (IRAC) norms. Based on the inspection report, 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 and examination of additional submission, RBI concluded that the aforesaid non-compliance warranted imposition of monetary penalty.

The central bank has also imposed a monetary penalty of ₹ 75 lakh (Rupees Seventy Five Lakh) on Syndicate Bank (the bank) for non-compliance with the directions issued by RBI on (i) Frauds Classification and Reporting and (ii) Housing Sector: Innovative Housing Loan Products - Upfront disbursal of housing loans. The Return on Fraud filed by the bank with RBI revealed that the bank had failed to comply with certain provisions of directions issued by RBI on fraud reporting and disbursal of housing loans. Based on the findings, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the directions issued by RBI. After considering the reply received from the bank and submissions made during the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.

This 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, the RBI said.

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