On December 12, 2017, RBI has imposed Rs. 50 million (5 Crore) on Syndicate Bank (the bank) for non-compliance of RBI directions/ guidelines. RBI highlights that,
“Syndicate Bank has violated norms and directions prescribed by RBI for cheque purchase/discounting, bill discounting, and Know Your Customer (KYC)/Anti-Money Laundering (AML).”
RBI has imposed the penalty under Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949, taking into account failure of the bank to adhere to the aforesaid directions/guidelines issued by RBI.
After receiving the report of fraud happening at various branches of the bank RBI scrutinized and examined related documents. Thereafter, Notice was issued to the bank advising to show cause as to why penalty should not be imposed for non-compliance with directions/guidelines issued by RBI. Hence, after analyzing bank’s reply and oral submissions made in the personal hearing RBI has imposed the mentioned penalty.
RBI further mentions that this action 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.