The Reserve Bank of India (RBI) on Monday imposed a monetary penalty of Rs 1.05 crore on Kotak Mahindra Bank Ltd for non-compliance with certain directions issued by the central bank.

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The bank received a penalty for non-compliance with certain directions issued by RBI on Customer Protection–Limiting Liability of Customers in Unauthorised Electronic Banking Transactions, the central bank said.

"The Reserve Bank of India (RBI) imposed a monetary penalty of Rs 1,05,00,000/- (Rupees one crore and five lakh only) on Kotak Mahindra Bank Limited (the bank) for contravention of the provisions of sub-section (2) of Section 26A of the Banking Regulation Act, 1949 read with paragraph 3 of The Depositor Education and Awareness Fund Scheme, 2014’ and for non-compliance with the directions on ‘Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions, and Loans and Advances – Statutory and Other Restrictions," the RBI said in a statement.

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As per RBI's press release, this action 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.

The Statutory Inspection for Supervisory Evaluation (ISE) of the Kotak Mahindra Bank was conducted by the RBI with regard to its financial positions as on March 31, 2018, and March 31, 2019, the RBI said.

“The examination of the Risk Assessment Reports, Inspection Reports and all related correspondence pertaining to the same, revealed, inter alia, contravention of / non-compliance with the above-mentioned provisions of the Act and the directions issued by RBI, to the extent the bank failed to (i) credit the eligible amount to the Depositor Education and Awareness Fund within the period prescribed, (ii) credit (shadow reversal) the amount involved in the unauthorised electronic transactions to the customers’ account within 10 working days from the date of notification by the customer, in certain cases, and (iii) maintain/ apply margin on advances to stock brokers," it said.

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After considering the bank's reply to the notice, oral submissions made in the personal hearing, and examination of additional submissions made by the bank, RBI came to the conclusion that the charges of contravention of / non-compliance with the aforesaid provisions of the Act / RBI directions were substantiated and warranted imposition of monetary penalty on the bank, to the extent of contravention of / non-compliance with such provisions of the Act / RBI directions, RBI added.

First Published:Jul 4, 2022 9:41 PM IST