Penalty For Canara Bank

RBI has fined Canara Bank. A fine of Rs 2.92 crore was imposed. Penalties are imposed for non-compliance of RBI instructions regarding determination of advance interest rate and determination of interest rate on deposits. Other grounds for imposition of fines include alleged violations of RBI regulations on banking operations and customer service. It is covered by consumer protection laws that limit customers’ liability for unauthorized electronic banking transactions. The penalty was levied after a legal review by the RBI.

The action was taken after examining the bank’s reply to the notice sent to the bank. The bank was inspected by the RBI in July 2020 based on a fraud reported by another bank. The RBI informed that after examining the risk assessment report, due diligence report and all related correspondence, the action was taken in case of non-compliance of RBI instructions.

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The central bank has indicated that the bank has failed to comply with the RBI directive on interest on floating rate retail loans and MSME loans. It is indicated that the floating rate loan interest sanctioned and revised in the financial year 2020-21 has failed to link with the MCLR rate.

It has been found that several savings deposit accounts have been opened in the bank in the name of undeserving entities and dummy mobile numbers have been registered in several credit card accounts. It is alleged that there was failure to pay interest on deposits received under the Daily Deposit Scheme and SMS alert charges were levied on customers not based on actual usage.

The RBI clarified that the penalty was imposed for failure to comply with the said instructions and the action was not based on any transaction or agreement with the bank’s customers. This will not affect customers