The Reserve Bank of India (RBI) has fined Bank of Baroda and Citibank for regulatory violations. Bank of Baroda has been fined with ₹4.34 crore based on non-compliance on certain directives, while Citibank has been fined with ₹5.00 crore for breach of certain provisions in the Banking Regulation Act and non-compliance with RBI guidelines.
The Statutory Inspection for Supervisory Evaluation of Bank of Baroda and Citibank was conducted by RBI, assessing their financial position as of March 31, 2021, revealed several instances of violations and non-compliance.
The examination for Bank of Baroda revealed, the bank’s failure in ensuring the accuracy and integrity of data on large exposures submitted to RBI concerning some accounts. Additionally, it sanctioned a term loan to a Corporation, substituting budgetary resources for certain projects without due diligence on their viability and bankability, leading to repayment issues. The bank also sanctioned a working capital demand loan against amounts receivable from the government by way of subsidies. Furthermore, it did not pay interest rates on deposits accepted from senior citizens, as per the disclosed schedule of interest rates.
The Citibank examination revealed several irregularities by the bank, including paying commissions to certain employees, not crediting the eligible amount to the Depositor Education and Awareness Fund in a timely manner, and outsourcing the monitoring and decision-making of Anti-Money Laundering (AML) alerts to a Group company.
RBI issued a notice to the banks, asking them to explain as to why a penalty should not be imposed for failing to comply with the specified directions. After reviewing the bank’s response and oral submissions during the personal hearing, RBI concluded that the charges of non-compliance with the mentioned directions and contravention of BR Act provisions for the banks was substantiated, justifying the imposition of a monetary penalty.