RBI slaps hefty fines on Citibank, Bank of Baroda, and Indian Overseas Bank for flouting norms


Mumbai: The Reserve Bank of India (RBI) has imposed a total penalty of Rs 10.34 crore on three banks for violating various regulatory norms related to depositors’ education, outsourcing, loan reporting, and other matters. The RBI said in separate statements on Friday that the action was taken based on the deficiencies in regulatory compliance and not intended to affect the validity of any transaction or agreement entered into by the banks with their customers.

Citibank NA was fined Rs 5 crore for non-compliance with the norms relating to the Depositor Education and Awareness Fund Scheme (DEAFS) and the code of conduct for outsourcing financial services. The DEAFS was established by the RBI in 2014 to promote depositors’ interest and awareness. The code of conduct on outsourcing of financial services lays down the principles and guidelines for banks to ensure that the outsourcing arrangements do not impair their ability to fulfill their obligations to customers and regulators.

Bank of Baroda was fined Rs 4.34 crore for violation of certain instructions related to the formation of a central repository of large common exposures (CRILC) and other matters regarding the loan. The CRILC was set up by the RBI in 2014 to collect, store, and disseminate data on all borrowers’ credit exposures. The RBI said that the Bank of Baroda had failed to report some of its large exposures to the CRILC and also violated the norms on income recognition, asset classification, and provisioning pertaining to the loan.


Indian Overseas Bank was fined Rs 1 crore for violation of loan-related instructions. The RBI said that the bank had not complied with the norms on the classification and reporting of frauds, and on the timely implementation of a corrective action plan under the prompt corrective action (PCA) framework. The PCA framework is a supervisory tool used by the RBI to monitor the financial health of banks and take corrective measures if they breach certain thresholds.