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RBI imposes Rs 2.2-crore penalty on Indian Overseas Bank 

RBI imposes Rs 2.2-crore penalty on Indian Overseas Bank 


Reserve Bank on Friday imposed a penalty of Rs 2.20 crore on state-owned Indian Overseas Bank (IOB) for non-compliance of revenue recognition and different deficiencies in regulatory compliance. The positive is imposed for contravention of the provisions of sure instructions issued by RBI on ‘Prudential Norms on Income Recognition, Asset Classification and Provisioning Pertaining to Advances – Divergence in NPA Accounts’, ‘Reserve Bank of India (Interest Rate on Deposits) Directions, 2016’ and Advisory on ‘Man within the Middle (MiTM) Attacks in ATMs’.

This motion relies on the deficiencies in regulatory compliance and isn’t meant to pronounce upon the validity of any transaction or settlement entered into by the financial institution with its prospects, RBI stated. The statutory Inspection for Supervisory Evaluation of the financial institution (ISE 2021) was carried out by RBI on the subject of its monetary place as on March 31, 2021, it stated.

The Chennai-based financial institution didn’t make minimal obligatory switch of a sum equal to 25 per cent of its disclosed revenue for the yr 2020-21 to its reserve fund, it stated.There was vital divergence between the NPAs, as reported by it and as assessed by the inspection, and it provided curiosity on deposits of non-individual constituents at charges relevant to senior/tremendous senior residents, in sure cases.

Besides, the financial institution didn’t implement management measures for ATMs regarding end-to-end encryption of communication between the ATM terminal/PC and the ATM Switch, inside the timelines prescribed. Two notices have been issued to the financial institution advising it to point out trigger as to why penalty shouldn’t be imposed on it for failure to adjust to the provisions of the Act and the instructions issued by RBI. After contemplating the financial institution’s replies to the notices, oral submissions made through the private listening to and examination of further submissions made by it, RBI got here to the conclusion that the fees of contravention/ non-compliance have been substantiated and warranted imposition of financial penalty on the financial institution, it stated. 



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