Mumbai: The Reserve Bank imposed a penalty of Rs 2.20 crore on public sector lender Indian Overseas Bank (IOB). The fine was imposed for non-compliance of income recognition and other deficiencies in regulatory compliance.
RBI informed that it imposed penalty as bank failed to make minimum mandatory transfer of a sum equivalent to 25 percent of its disclosed profit for the year 2020-21 to its reserve fund and there was significant divergence between the non-performing assets (NPAs) as reported by it and as assessed by the inspection.
The lender also offered interest on deposits of non-individual constituents at rates applicable to senior / super senior citizens, in certain instances, and it failed to implement control measures for ATMs relating to end-to- end encryption of communication between the ATM terminal/PC and the ATM Switch, within the timelines prescribed.
RBI has issued two notices to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the provisions of the Act and the directions issued by RBI.
After considering the bank’s replies to the notices, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI came to the conclusion that the charges of contravention/ non-compliance were substantiated and warranted imposition of monetary penalty on the bank, RBI said in a statement.