InvestorQ : Why has RBI imposed a huge fine on Federal Bank?
Arti Chavan made post

Why has RBI imposed a huge fine on Federal Bank?

Rutuja Nigam answered.
4 weeks ago

RBI has imposed a penalty of Rs5.72 crore on Federal Bank regarding non-compliance with specific norms related to insurance broking. For instance, there were cash and non-case incentives that were paid to the staff engaged in insurance broking and corporate agency services by the insurance company, which goes against the grain of banking rules. There are certain prescribed rules that banks have to follow while conducting the bancassurance business since both are different types of services with different risk profile altogether.

In addition to fining Federal Bank, RBI has also imposed a fine of Rs70 lakh on Bank of India for not appropriately complying with the Know-Your-Customer (KYC) norms. Here the charges is that BOI failed to allot Unique Customer Identification Code (UCIC) to several customers and complete formalities within extended timelines. Earlier, RBI had also penalized Kotak Bank and IndusInd Bank with penalties of around Rs1 crore for deficiencies in regulatory compliance. In the case of Kotak, such lapses pertained to broking activities.