Reserve Bank of India has imposed a penalty of ₹2.2 crore on Indian Overseas Bank for violation of various regulatory norms, the central bank said in a release.
The breach pertains to guidelines on disclosure of NPA (non-performing assets) divergence, interest rates on deposits, and advisory on ‘Man in the Middle (MiTM) attacks in ATMs.
RBI had conducted the Statutory Inspection for Supervisory Evaluation as per Indian Overseas Bank’s financial position as on March 2021, wherein it found contravention of certain provisions.
The public sector bank failed to make a minimum mandatory transfer of a sum equivalent to 25 per cent of its disclosed profit for FY21 to its reserve fund. Further, there was a significant divergence between the NPAs, as reported by it and as assessed by the inspection, and the bank offered interest on deposits of non-individual constituents at rates applicable to senior/super senior citizens, in certain instances.
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The lender also did not implement control measures for ATMs relating to end-to-end encryption of communication between the ATM terminal/PC and the ATM Switch, within the timelines prescribed, RBI said.
As a result, the central bank issued two show-cause notices to the bank, and decided that the charges were substantiated after considering the submissions made by the bank.
“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 release said.
Also read: RBI imposes ₹84.50 lakh penalty on Central Bank of India
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