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RBI imposes Rs 5-cr penalty on Axis Bank

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The penalty has been imposed for "contravention of/non-compliance" with certain provisions of directions issued by the RBI.

RBI imposes Rs 5-cr penalty on Axis Bank
The Reserve Bank of India (RBI) on Tuesday imposed a Rs 5 crore penalty on Axis Bank for contravention of certain provisions issued by the apex bank, which include cybersecurity framework.
The central bank, in a statement, said this action was 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.
The penalty was imposed for "contravention of/non-compliance" with certain provisions of directions, which include "strengthening the controls of payment ecosystem between sponsor banks and SCBs/UCBs as a corporate customer'; 'cybersecurity framework in banks'; and 'Reserve Bank of India (Financial Services provided by Banks) directions, 2016".
The apex bank said the statutory inspections for supervisory evaluation (ISE) of the bank were conducted 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 non-compliance has been revealed by the examination of the Risk Assessment Reports pertaining to ISE 2017, ISE 2018 and ISE 2019.
The report of scrutiny carried out by RBI in the backdrop of the incident relating to a fraud and related correspondence thereto; and the incident report submitted by the bank in June 2020 related to a few suspected transactions and related correspondence. 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 directions.
The central bank said 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.
RBI, however, added the imposition of penalty 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.
Meanwhile, the RBI has also imposed a penalty of Rs 5 lakh on Alibag Co-operative Urban Bank Limited, Raigad, and Rs 1 lakh on The Mahabaleshwar Urban Cooperative Bank Limited, Mahabaleshwar, for deficiencies of regulatory compliance, according to a PTI report.
-With PTI inputs