RBI penalises PNB and BOI for fraud detection

The Reserve Bank of India(RBI) has imposed penalties on two Indian banks. While a penalty of Rs 4 crore has been imposed on the Bank of India(BOI), the Punjab National Bank(PNB) will have to pay up an amount of Rs 2 crore to the banking regulator.

The Reserve Bank said in a statement that it had conducted a statutory Inspection for Supervisory Evaluation(ISE) of Bank of India. Financial position till the end of March 2019 was taken as the reference for the same. Earlier on January 1 in the same year, the bank had submitted a Fraud Monitoring Report(FMR) related to fraud detection in one of the bank’s accounts. The RBI then studied a risk assessment report on the ISE and the FMR and found many discrepancies:

  1. non-compliance with/contravention of directions, viz., breach of stipulated transaction limits
  2. delay in reporting fraud to RBI and sale of a fraudulent asset
  3. delay in transfer of unclaimed balances to DEA Fund

Meanwhile in the case of the Punjab National Bank, “The statutory Inspection for Supervisory Evaluation (ISE) of the bank was conducted by RBI with reference to its financial position as on March 31, 2018 (ISE 2018) and March 31, 2019 (ISE 2019),” the central bank said in a separate statement. A risk assessment of the same revealed a delay in reporting frauds on part of the bank. The RBI also said that PNB did not ensure “data accuracy and integrity” while submitting data on the CRLIC(Central Repository of Information on Large Credits) platform of RBI.

In both cases, the RBI issued show-cause notices to the banks. After considering their replies, RBI came to the conclusion that the charges were substantial and went on to impose a fine of Rs 2 crore on Punjab National Bank and Rs 4 crore on the Bank of India.

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