RBI slaps Rs 2.92-cr penalty on Canara Bank for violating norms

The Reserve Bank of India (RBI) on Friday imposed a monetary penalty of Rs 2.92 crore on Canara Bank for violation of various norms, the central bank said in a release.

The RBI said it conducted scrutiny of Canara Bank in July 2020 and it revealed that the bank had failed to link interest on floating rate retail loans and loans MSMEs to an external benchmark, failed to link interest on floating rate rupee loans sanctioned and renewed during FY21 to its MCLR and opened several savings deposit accounts in the name of ineligible entities.

Also read: Government procures 42 per cent more than the set target from MSEs under the Public Procurement Policy

The lender also registered dummy mobile numbers in several credit card accounts, failed to pay any interest on deposits accepted under the daily deposit scheme and prematurely withdrawn within 24 months of opening of the accounts, recovered SMS alert charges from customers not on actual usage basis and failed to undertake customer due diligence and put into use robust software for generating alerts when transactions were inconsistent with customer profile, the RBI said.

Also read: Spice Money and BCG to build a digital financial service platform for rural India

“After considering the bank’s replies to the notices and oral submissions made during the personal hearing, the RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty to the extent of non-compliance with such directions,” the release said.

It added that the action not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.