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The Reserve Bank of India has imposed a monetary penalty of ₹5 crore on private sector lender Axis Bank.
The penalty is for contravention of and non-compliance with certain provisions of directions issued by RBI on ‘Strengthening the Controls of Payment Ecosystem between Sponsor Banks and SCBs/UCBs as a Corporate Customer’, ‘Cyber Security Framework in Banks’, ‘RBI (Financial Services provided by Banks) Directions, 2016’, ‘Financial Inclusion- Access to Banking Services – Basic Savings bank Deposit Account’ and ‘Frauds – Classification and Reporting’.
“The penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with section 46 (4) (i) of the Banking Regulation Act, 1949 (the Act),” the RBI said on Wednesday, adding that 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.
The RBI had conducted statutory Inspections for Supervisory Evaluation (ISE) of Axis Bank with reference to its financial position as of March 31, 2017, March 31, 2018 and March 31, 2019.
The examination of the Risk Assessment Reports pertaining to ISE 2017, ISE 2018 and ISE 2019, the report of scrutiny carried out by RBI in the backdrop of the incident relating to fraud and related correspondence, and the incident report submitted by the bank in June 2020 relating to a few suspected transactions and related correspondence, revealed contravention of or non-compliance with the directions of RBI.
Axis Bank was then issued notices to show cause as to why penalty should not be imposed on it for its failure to comply with the directions, the RBI said.
After considering the bank’s replies to the notices, oral submissions made during the personal hearing and examination of additional submissions made by the bank, RBI came to the conclusion that the charges of non-compliance with and contravention of the RBI directions were substantiated and warranted imposition of monetary penalty on the bank.
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