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Reserve Bank of India (RBI)

Reserve Bank of India (RBI) has imposed today monetary penalty on two of its leading Private Banks separately on finding “Deficiencies in regulatory compliance” by way of non-compliance of certain directions under different Circulars issued by RBI.

The sum and substances of directions/Circulars and regulatory deficiencies are mentioned below for information and learning: 


a)    ’Customer Service in Banks’

b)   ‘Un-authorized Operation of lnternal/Office Accounts’

c)    ‘Loans and Advances – Statutory and Other Restrictions’



RBI specified/highlighted following regulatory deficiency by Banks:

a) Levied charges for non-maintenance of minimum balance in certain savings accounts having insufficient/zero balance; and 

b) Opened and operated certain internal accounts in the name of its customers for unauthorized purposes like parking funds and routing customer transactions;

c) Sanctioned Term loan(s) to certain entities:

   i) In lieu of or to substitute budgetary resources envisaged for certain projects; 

  ii) Without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were sufficient to take care of the debt servicing obligations;

  iii)The repayment/servicing of which was made out of budgetary resources; and

  iv) Without ensuring that the funding proposals were for specific monitorable projects.

Being compliance professional, it is high time to be more vigilant and ensure that the direction/instructions issued by RBI from time to time is complied in letter and spirit so as to remove the chances of non-compliance as well as of attracting monetary penalty. 

Copies of both the press release issued today by RBI are attached herewith for ready reference of all.

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