Reserve Bank of India (RBI) has imposed a penalty of ₹4 crore on Citibank for non-compliance of no-objection certificate (NOC) norms at the time of opening current accounts.
According to RBI, the US based foreign bank was penalised for non-compliance with the directions issued by RBI on obtaining declaration from customers about credit facilities enjoyed with other banks, granting non-fund based facilities to non-constituent borrowers, verifying data available in CRILC database and obtaining No-Objection Certificate (NOC) from lending banks at the time of opening current accounts, and submission of compliance to risk assessment findings.
The central bank had done the statutory inspection of the bank with reference to its financial position as on March 31, 2017, and as on March 31, 2018, and the Risk Assessment Reports (RAR) pertaining thereto revealed, inter-alia, non-compliance with the directions issued by RBI, it said in the press release.
Earlier a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the directions.
After considering the bank's reply to the notice, oral submissions made in the personal hearing and examination of additional submissions, RBI concluded that the charges of non-compliance with RBI directions warranted imposition of monetary penalty, according to a release.
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.
On Thursday, RBI had imposed a fine of ₹6.5 crore on three banks, Bank of India, Karnataka Bank and Saraswat Co-operative Bank. While Bank of India (BoI) was fined ₹5 crore, Karnataka Bank and Saraswat Co-operative Bank were fined ₹1.2 crore and ₹30 lakh, respectively. For Bank of India, RBI said, the fine was imposed because it violated certain provisions on asset classification, divergence, opening of current accounts, and classification and reporting of frauds.
The fine on Karnataka Bank, RBI said, was imposed for non-compliance of asset classification, divergence and provisioning norms. Meanwhile, Saraswat Co-operative Bank violated asset classification norms and was therefore fined.