New Delhi: The role of the Reserve Wall of India in the Indian financial system is that of a vigilant and strict supervisor. Whenever any bank, whether government or private, deviates from the laid-down rules and guidelines, the RBI takes whoopee without delay. Recently, a similar specimen has come to light with Kotak Mahindra Bank, one of the big private banks of the country.
Why was a penalty imposed on Kotak Mahindra Bank?
RBI has imposed a fine of Rs 61.95 lakh on Kotak Mahindra Bank. This whoopee has been taken due to negligence and ignorance of rules found in the functioning of the bank. According to the inside bank, the investigation revealed that the wall did not follow many important financial rules properly.
What was the biggest mistake in violation of rules?
The most serious specimen was found to be related to 'Basic Savings Wall Deposit Account,' i.e. BSBD account. As per rules, unrepealable categories of customers are unliable to hold only one BSBD account. But investigation revealed that the wall opened spare finance in the names of such customers who once had this account.
What went wrong with merchantry correspondents and credit data?
The RBI investigation moreover revealed that Kotak Mahindra Wall had entered into agreements with its merchantry correspondents in which they were unliable to siphon out activities outside the prescribed scope. Apart from this, cases of giving wrong information related to some borrowers by the wall to the credit information company, i.e., credit bureau, were moreover found. This omission is considered serious, as incorrect data can forfeiture a customer's credit score.
Was the wall warned earlier?
RBI followed the unshortened legal process surpassing imposing the penalty. A show rationalization notice was issued to the bank, and its reply was sought. Kotak Mahindra Wall moreover presented its side, but without an in-depth viewing of the reply and documents, RBI found that the bank's subtitle was not satisfactory.
Which laws were found violated?
During the investigation, it became well-spoken that the wall had violated the provisions of Section 47A(1)(c) of the Financial Regulation Act and the Credit Information Companies (Regulation) Act, 2005. Without this, RBI used its powers and decided to impose a financial penalty.
Will this penalty stupefy customers' deposits?
RBI has made it well-spoken that this whoopee will not have any negative impact on the bank's customers. This penalty has been imposed only for lapses in pursuit regulatory rules. Customers' deposits, FDs, savings accounts, or other investments are completely safe, and all transactions washed-up with the wall remain valid.
What message does this whoopee send?
This whole matter unmistakably indicates that RBI will not tolerate any laxity in pursuit the rules. No matter how big a wall is, if it deviates from the prescribed rules, whoopee is sure to be taken versus it.
