4 min read.Updated: 13 Jul 2021, 09:51 PM ISTDeep Mukherjee
Stiff fines can nudge banks to invest in the control systems they need to address risks left unattended
The staid world of monetary penalties imposed by the Reserve Bank of India (RBI) rarely makes headlines. But in May 2021, RBI imposed a fine of ₹10 crore on a private bank and this made news for being the highest by India’s bank regulator. However it is a relatively small amount by global standards, even if adjusted for the exchange rate and size of the banking industry. Globally, regulatory fines imposed on banks and other financial institutions started shooting up from 2010. In 2020, as per a Fenegro report, financial institutions were hit by fines and penalties of $10.4 billion in total.
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