Home / Industry / Banking /  RBI imposes 5 cr penalty on Axis Bank for contravention of certain provisions

MUMBAI : The Reserve Bank of India (RBI) today said it has imposed a penalty of 5 crore on Axis Bank for contravention of certain provisions of directions issued by the central bank, including on cybersecurity framework.

The RBI in a statdement said the penalty has been imposed for "contravention of / non-compliance" with certain provisions of directions issued by RBI on ‘Strengthening the Controls of Payment Ecosystem between Sponsor Banks and SCBs/UCBs as a Corporate Customer’, ‘Cyber Security Framework in Banks’, ‘Reserve Bank of India (Financial Services provided by Banks) Directions’, ‘Financial Inclusion- Access to Banking Services – Basic Savings Bank Deposit Account’ and ‘Frauds – Classification and Reporting.’

The central bank said the penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47 A (1) (c) with section 46 (4) (i) of the Banking Regulation Act, 1949 (the Act).

The RBI said the statutory Inspections for Supervisory Evaluation (ISE) of the bank were conducted by RBI with reference to its financial position as on March 31, 2017 (ISE 2017), March 31, 2018 (ISE 2018) and March 31, 2019 (ISE 2019).

The examination of (i) the Risk Assessment Reports pertaining to ISE 2017, ISE 2018 and ISE 2019, (ii) the report of scrutiny carried out by RBI in the backdrop of the incident relating to a fraud and related correspondence thereto, and (iii) the incident report submitted by the bank in June 2020 relating to a few suspected transactions and related correspondence, revealed, inter-alia, contravention of / non-compliance with the above-mentioned directions issued by RBI.

The central bank notices were issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions, as stated therein.

After considering the bank's replies, oral submissions, and examination of additional submissions made by the bank, the RBI came to the conclusion that the charges of non-compliance with/contravention of the directions were substantiated and warranted imposition of monetary penalty, the central bank said.

The RBI, however, said 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.

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