The Reserve Bank of India (RBI) has imposed a penalty of Rs 3 crore on private sector Axis Bank for violation of non-performing asset (NPA) classification norms, and Rs 2 crore on state-run Indian Overseas Bank (IOB) for not complying with the Know Your Customer (KYC) regulations, the banking regulator said on Monday.
A statutory inspection of Axis Bank, with reference to its financial position as on March 31, 2016, revealed "violations of various regulations issued by RBI in the assessment of NPAs", or bad loans, the central bank said in a statement.
"The RBI has imposed, on February 27, 2018, a monetary penalty of Rs 30 million on Axis Bank Ltd for non-compliance with the directions issued by RBI on Income Recognition and Asset Classification (IRAC) norms," it said.
NPAs in the banking system have crossed the staggering level of Rs 8.5 lakh crore, of which state-run banks account for Rs 7.5 lakh crore.
In a separate release regarding Indian Overseas Bank, the RBI said that a fraud was detected in one of the branches of IOB, resulting in the regulator imposing a penalty of Rs 2 crore on the government-owned bank.
"The examination of the documents, including the bank's internal inspection report, revealed, inter alia, non-compliance with the directions issued by RBI on KYC norms", RBI said.
The central bank also said the action on the two commercial banks is based on 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".
Last month, the banking system was rocked with the unveiling of the Rs 12,600 crore fraud on state-run Punjab National Bank by the accused diamantaire Nirav Modi and his uncle Mehul Choksi.
Latest Business News
