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Date : Mar 08, 2019
Reserve Bank of India imposes monetary penalty on 36 banks

The Reserve Bank of India (RBI) has imposed, by orders dated January 31, 2019 and February 25, 2019, monetary penalty for non-compliance with various directions issued by RBI on time-bound implementation and strengthening of SWIFT-related operational controls on 36 banks as detailed below:

Sr. No. Name of the bank Amount of penalty
(in ₹ Million)
1. Bank of Baroda 40
2. Catholic Syrian Bank Limited 40
3. Citibank N.A. 40
4. Indian Bank 40
5. Karnataka Bank Limited 40
6. BNP Paribas 30
7. City Union Bank Limited 30
8. Indian Overseas Bank 30
9. UCO Bank 30
10. Union Bank of India 30
11. United Bank of India 30
12. Allahabad Bank 20
13. Bank of Maharashtra 20
14. Canara Bank 20
15. DCB Bank Limited 20
16. Dena Bank 20
17. Jammu & Kashmir Bank Limited 20
18. Oriental Bank of Commerce 20
19. Syndicate Bank 20
20. Bank of America N.A. 10
21. Barclays Bank Plc 10
22. Central Bank of India 10
23. Corporation Bank 10
24. DBS Bank Limited 10
25. Deutsche Bank A.G. 10
26. Hongkong and Shanghai Banking Corporation Limited 10
27. ICICI Bank Limited 10
28. IDBI Bank Limited 10
29. IndusInd Bank Limited 10
30. JP Morgan Chase Bank N.A. 10
31. Karur Vysya Bank Limited 10
32. Punjab & Sind Bank 10
33. Standard Chartered Bank 10
34. State Bank of India 10
35. Tamilnad Mercantile Bank Limited 10
36. YES Bank Limited 10

These penalties have been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949, taking into account failure of the above banks to adhere to the aforesaid directions issued by RBI. This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.

Background

An assessment of compliance with RBI directions on implementation and strengthening of SWIFT-related operational controls of 50 major banks was carried out which revealed that banks had not complied with one or more of the major directions pertaining to (i) direct creation of payment messages in the SWIFT environment, (ii) implementation of Straight Through Processing (STP) between CBS/Accounting System and SWIFT system, (iii) ensuring that users entering/ passing/authorizing the transactions in CBS were different from those operating in SWIFT environment, (iv) independent reconciliation of logs generated from SWIFT with corresponding entry passed in the CBS/accounting system, (v) introduction of an additional layer of approval for all payment messages exceeding a particular threshold, and (vi) Nostro reconciliation on T+1/T+5 basis.

Based on the findings of the assessment and extent of non-compliance, Notices (SCNs) were issued to 49 banks advising them to show cause as to why penalty should not be imposed for non-compliance with directions issued by RBI as indicated therein. After considering the replies received from the banks, oral submissions made in the personal hearings, where sought by the banks, and examination of additional submissions, if any, RBI decided to impose monetary penalty on aforementioned 36 banks, based on the extent of non-compliance in each bank.

RBI will continue to closely monitor compliance with these controls on an ongoing basis.

Jose J. Kattoor
Chief General Manager

Press Release: 2018-2019/2144


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