RBI Imposes Rs35.60 Lakh Penalty on Federal Bank and Karur Vysya Bank for Non-compliance with Directions
Moneylife Digital Team 10 February 2025
Reserve Bank of India (RBI) has imposed a penalty of Rs35.60 lakh on Federal Bank Ltd and Karur Vysya Bank Ltd for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs27.30 lakh has been imposed on Federal Bank. Karur Vysya Bank was fined Rs8.30 lakh.
 
Federal Bank has been penalised for non-compliance with directions issued by RBI on interest rates of deposits.
 
A recent statutory inspection by RBI revealed that Federal Bank had opened certain savings deposit accounts in the name of ineligible entities.
 
Karur Vysya Bank was fined Rs8.30 lakh for not complying with specific directions issued by the RBI regarding the loan system for bank credit delivery. RBI found out that the Karur Vysya Bank did not ensure that the outstanding loan amount was at least the required percentage of the sanctioned working capital limit for certain borrowers.
 
"After considering the reply and oral submissions of both the banks during the personal hearing, RBI concluded that the charges of non-compliance with directions were substantiated and warranted imposition of monetary penalty," RBI says.
 
In both cases, RBI says the penalties are based on deficiencies in regulatory compliance and are not intended to be pronounced on the validity of any transaction or agreement they entered into with their customer.
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