The Reserve Bank of India (RBI) has, by an order dated November 29, 2019, imposed a monetary penalty of ₹1.50 crore on Corporation Bank (the bank) for non-compliance with certain provisions of directions issued by RBI on “Prudential Norms on Income Recognition, Asset Classification and Provisioning Pertaining to Advances - Divergence in NPA Accounts”, “Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances”, “Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks”, “Framework to Revitalise the Distressed Assets in the Economy - Rectification and Restructuring”, “End Use of Funds - Monitoring”, “Discounting/Rediscounting of Bills by Banks” and “Reserve Bank of India (Frauds classification and reporting by commercial banks and select FIs) directions 2016”.
The penalty has been imposed in exercise of powers vested in the RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and 51 (1) of the Banking Regulation Act, 1949. This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
The statutory inspection of the bank with reference to its financial position as on March 31, 2017 and the Risk Assessment Report (RAR) pertaining thereto revealed, inter-alia, non-compliance with above-mentioned directions issued by RBI. In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the directions. After considering the bank’s reply to the notice, oral submissions made in the personal hearing and examination of additional submissions, RBI concluded that the aforesaid charges of non-compliance with RBI directions warranted imposition of monetary penalty.
Chief General Manager
Press Release: 2019-2020/1310