The Reserve Bank of India (RBI) has imposed the monetary penalty on Federal Bank Limited.
The Reserve Bank of India (RBI) has, by an order dated February 04, 2025, imposed a monetary penalty of ₹27.30 lakh on Federal Bank Limited (the bank) for non-compliance with certain directions issued by RBI on ‘Interest Rate on Deposits’.
This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) of the Banking Regulation Act, 1949.
The statutory Inspection for Supervisory Evaluation (ISE 2023) of the bank was conducted by RBI with reference to its financial position as on March 31, 2023. Based on the supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.
After considering the bank’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found that the following charge against the bank was sustained, warranting imposition of monetary penalty.
The bank had opened certain savings deposit accounts in the name of ineligible entities.
This action is based on 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. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
