The Reserve Bank of India (RBI) has said that it has imposed a monetary penalty of Rs 10 Lakh on South Indian Bank Limited (SIB) for non-compliance with directions issued by central bank on ‘Guarantees and Co-acceptances’.
The central bank said in a statement that, “The penalty has been imposed in exercise of powers vested in RBI under the provisions of the Banking Regulation Act, 1949, taking into account failure of the bank to adhere to the aforesaid directions issued by RBI. 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.”
The RBI said that it had received references from a government department and a private party alleging non-payment of invoked bank guarantees by the Thrissur-headquartered bank.
“Examination in this regard revealed a violation of RBI directions on ‘guarantees and Co-acceptances’ and a notice was issued to the bank advising it to show cause as to why the penalty should not be imposed for non-compliance with the directions,” the statement said.
After considering the bank’s reply, oral submissions made during the personal hearing and additional submission made by the bank after the personal hearing, RBI came to the conclusion that the aforesaid charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty, the central bank said.