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The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹55 lakh on Indian Bank for non-compliance with certain provisions of the RBI (Know Your Customer (KYC)) Directions, 2016. The penalty has been imposed under Section 47A (1)(c) read with Sections 46 (4)(i) and 51 (1) of the Banking Regulation Act, 1949, following deficiencies observed in regulatory compliance.
The RBI conducted a scrutiny of Indian Bank in July 2020 after the bank reported a high-value fraud. Examination of the scrutiny report and related correspondence revealed that the bank failed to undertake proper customer due diligence measures while opening an account in the name of a sole proprietary firm, contravening KYC norms.
A show-cause notice was issued to the bank, providing it an opportunity to explain the non-compliance. After considering the bank’s response, oral submissions during personal hearing, and additional submissions, RBI concluded that the charges were substantiated, warranting the imposition of the monetary penalty.
This action highlights RBI’s continued vigilance in enforcing KYC and customer due diligence norms to strengthen the integrity of India’s banking system.
[RBI]