RBI slaps penalty on Citibank, Bank of Baroda, IOB for violating norms

The Reserve Bank of India has imposed a monetary penalty of Rs 4.34 crore on Bank of Baroda, Rs 5 crore on Citibank, and Rs 1 crore on Indian Overseas Bank for violating norms.

On Bank of Baroda, RBI said the lender failed to ensure accuracy and integrity of data on large exposures submitted to RBI with respect to some accounts. It sanctioned a term loan to a corporation in lieu of, or to substitute, budgetary resources envisaged for certain projects. The loan was also sanctioned without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were sufficient to take care of the debt servicing obligations. Furthermore, BoB did not pay the interest rate on the deposits accepted from senior citizens, as per the schedule of interest rates disclosed in advance.

The penalty on Citibank was because the lender failed to credit the eligible amount to the Depositor Education and Awareness Fund within the prescribed time period, paid remuneration in the form of commission to its certain staff members, and outsourced the monitoring and disposal/closure (decision-making function) of AML (Anti-Money Laundering) alerts to a group company.

On IOB, RBI said the bank was found violating norms while extending term loans to two corporate entities without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were sufficient to take care of the debt servicing obligations, and it was sanctioned in lieu of, or to substitute, budgetary resources envisaged for certain projects.

Violations by BoB and Citibank were found following the Statutory Inspection for Supervisory Evaluation with reference to their financial positions as of March 31, 2021, while for IOB it was March 31, 2021.