The Reserve Bank of India (RBI) announced on May 17 that it has imposed a monetary penalty of ₹59.10 lakh on Karnataka Bank for violating rules.
The penalty was levied on Karnataka Bank for opening savings deposit accounts in the name of certain ineligible entities. Additionally, the bank failed to review or renew certain loan accounts within the prescribed period and did not classify these accounts as Non-Performing Assets (NPAs), as stated by the RBI in a release.
The RBI conducted a Statutory Inspection for Supervisory Evaluation of the bank’s financial position as of March 31, 2022. The findings revealed that the bank had not complied with RBI directions and related correspondence, the release mentioned.
Subsequently, the RBI issued a notice to the bank, asking it to explain why a penalty should not be imposed for its failure to comply with the directions.
“The action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transactions or agreement entered into by the bank with its customers,” the RBI clarified in the release.
