RBI Imposes Rs1.95 Crore Penalty on StanChart for Deficiencies in Regulatory Compliance
Moneylife Digital Team 18 October 2021
The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs1.95 crore on Standard Chartered Bank - India (StanChart) for non-compliance with RBI's directions on customer services. 
 
RBI found StanChart failed to credit the amount involved in the unauthorised electronic transactions to report cyber security incidents. StanChart also had authorised direct sales agents to conduct know-your-customer (KYC) verification and failed to ensure integrity and quality of data submitted in CRILC.
 
In a release, RBI says, "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."
 
Regarding StanChart's financial position as of 31 March 2020, RBI had conducted a statutory inspection for supervisory evaluation (ISE) of the bank. The central bank also examined risk assessment reports, inspection reports and all related correspondence about deficiencies in regulatory compliance.
 
RBI says the inspection revealed non-compliance with its directions to the extent of ) failure to credit (shadow reversal) the amount involved in the unauthorised electronic transactions, not reporting cyber security incident within the prescribed period, authorising the direct sales agents (outsourced third party) to conduct KYC verification, and failure to ensure integrity and quality of data submitted in the central repository of information on large credits (CRILC).
 
RBI then issued a show-cause notice to StanChart asking the lender why a penalty should not be imposed on it for infringement of and non-compliance with its directions.
 
After considering StanChart's replies to the notice, oral submissions made during the personal hearing, and additional submissions made by the bank, RBI says it concluded that the charge of contravention of or non-compliance with its directions. It then imposed a penalty of Rs1.95 crore on StanChart.
 
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