Penal amount hike on the cards as RBI likely to revamp framework

The Reserve Bank of India (RBI) may undertake a comprehensive review of its framework for penalties, according to a top regulatory source.

These may include raising the penal amount; the feasibility of linking it to the size of regulated entities (REs), especially for systemically important entities, and repeat offences; and clawback of the payouts to chief executive officers and key management personnel (KMP). 

In the case of state-run banks, remarks made by the RBI’s senior supervisory manager on KMP could decide how they progress in their careers. It is speculated that “additional capital charge on REs cannot be ruled out”.