Canara Bank has been fined a total of Rs. 2.92 crores by the Reserve Bank of India (RBI), which announced the decision on Friday. The violations that led to the punishment include the connection of Canara Bank’s interest rates to external benchmarks and the establishment of savings accounts for ineligible organizations.
The supervisory examination that was required by law was carried out by the regulator, and the results were analyzed in relation to the bank’s financial standing as of the 31st of March 2021.
“A scrutiny of the bank was carried out by RBI in July 2020 based on a high-value fraud reported by another bank,” the Reserve Bank of India (RBI) said in a statement.
After conducting the inspection, the central bank came to the conclusion that the bank had failed to link the interest on floating-rate retail loans and loans to MSMEs to an external benchmark. Additionally, the bank had failed to link the interest on floating-rate rupee loans that were sanctioned and renewed during the financial year 2020-21 to its Marginal Cost of Lending Rate (MCLR).
According to the RBI, the PSU opened a number of new savings deposit accounts in the name of entities that were not eligible for such accounts, registered fictitious mobile phone numbers in a number of credit card accounts, and failed to pay any interest on deposits that were accepted under the daily deposit scheme but were prematurely withdrawn within twenty-four months of the accounts being opened.
In addition, the regulator said that the bank charged consumers for SMS alerts while not basing those costs on actual use and that it failed to conduct continuing customer due diligence or make use of sophisticated technologies that generated warnings when transactions did not match a client’s profile.
“In furtherance to the same, notices were issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions, as stated therein,” the RBI said in its statement. “In furtherance to the same, notices were issued to the bank advising it to show cause as to why penalty should not be imposed on it.”