RBI Imposes Penalty on Bandhan Bank

Context:

The Reserve Bank of India (RBI) imposed a penalty of ₹44.70 lakh on Bandhan Bank following a supervisory inspection related to its financial position as of March 31, 2024. This highlights the regulator’s continued vigilance over banks’ adherence to compliance norms.

Key Highlights:

• Reason for Penalty:
  • Payment of commission-based remuneration to certain employees—contrary to RBI regulations.
  • Manual interventions in backend account data without properly capturing audit trails/logs with user details.
• Statutory Basis:
  • Penalty imposed under powers conferred by Section 47A(1)(c) read with Section 46(4) of the Banking Regulation Act, 1949.
  • Violations included breach of Section 10(1)(b)(ii) of the Act and RBI’s September 14, 2020 circular on automation of income recognition, asset classification and provisioning.

Important Sections For Exams

• 47A(1)(c): RBI’s power to impose penalty on banks for non-compliance.
• 46(4): Defines the maximum penalty amount (₹1 crore + ₹50,000/day for continuing default).
• Section 10(1)(b)(ii): Bars banks from employing persons convicted of serious offences or found unfit to protect depositor/public interest.
• RBI’s role: Ensures banks comply with this, safeguarding governance and depositor confidence.