RBI imposes ₹5 crore penalty on Axis Bank over rule violations
The Reserve Bank of India has imposed a penalty of ₹5 crore on Axis Bank for contravention of certain provisions of directions issued by the central bank, including on the cybersecurity framework. RBI reviewed the supervisory evaluations of the bank, an instance of fraud and instances of suspicious transactions in June 2020. "This action is based on...deficiencies in regulatory compliance," RBI said.
The penalty has been imposed for "contravention of/non-compliance" with certain provisions of directions issued by the RBI. They include 'Strengthening the Controls of Payment Ecosystem between Sponsor Banks and SCBs/UCBs as a Corporate Customer'; 'Cyber Security Framework in Banks'; and 'Reserve Bank of India (Financial Services provided by Banks) Directions, 2016'.
They also include 'Financial Inclusion-Access to Banking Services-Basic Savings Bank Deposit Account'; and 'Frauds-Classification and Reporting'.
The contravention of/ non-compliance with the directions 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.
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, the central bank said.
The RBI 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.
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