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09 December, 2021 18:15 IST
RBI imposes monetary penalty on City Union, Tamilnad Mercantile Bank
Source: RBI | 21 May, 2021, 02.27PM
Rating: NAN / 5 stars.
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The Reserve Bank of India (RBI) on May 20 levied monetary penalty on City Union Bank and Tamilnad Mercantile Bank citing non-compliance of certain provisions.

The Central Bank imposed a monetary penalty of Rs 10 million on Tamilnad Mercantile Bank for non-compliance with certain provisions of directions issued by RBI on "Cyber Security Framework in Banks" dated June 2, 2016, the RBI said.

This action is based on the 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.

On the other hand, the RBI levied Rs 10 million penalty on
City Union Bank for non-compliance with certain provisions of the directions on lending to Micro, Small & Medium Enterprises (MSME) Sector and the circulars on educational loan scheme and credit flow to agriculture, the RBI said.

Tamilnad Mercantile Bank had reported a few cyber incidents to RBI in October 2019. Examination of the incident reports revealed non-compliance by the bank with RBI directions on "Cyber Security Framework in Banks" dated June 2, 2016.

In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the said directions. After considering the bank's reply, the RBI came to the conclusion that the charges of non-compliance with RBI directions on "Cyber Security Framework in Banks" were substantiated and warranted imposition of monetary penalty.

In the situation of City Union Bank, the statutory inspection of the bank with reference to its financial position as on March 31, 2019 and the Risk Assessment Report (RAR) pertaining thereto revealed non-compliance with certain directions issued by RBI. Here also, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for failure to comply with the directions issued by RBI.

After considering the bank's replies to the notices, the RBI concluded that certain rules were dishonoured warranting a penalty, the RBI said.

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