The Reserve Bank of India (RBI) announced on Tuesday that it has fined Axis Bank Rs 5crore for violating key sections of RBI directives, including the cybersecurity framework. The fine was imposed due to “contravention of/non-compliance” with certain sections of RBI directives.
These include sections ‘Strengthening the Payment Ecosystem Controls between Sponsor Banks and SCBs/UCBs as a Corporate Customer,’ ‘Cyber Security Framework in Banks and Reserve Bank of India Bank of India’ are among them. ‘Financial Inclusion-Access to Banking Services-Basic Savings Bank Deposit Account’ and ‘Frauds-Classification and Reporting’ are also among the topics covered.
The statutory Inspections for Supervisory Evaluation (ISE) of the bank were carried out on March 31, 2017, (ISE 2017), March 31, 2018, (ISE 2018), and March 31, 2019, according to the RBI (ISE 2019).
The review of the Risk Assessment Reports for ISE 2017, ISE 2018, and ISE 2019 indicated the disobedience of/ non-compliance with the directions.
The RBI’s report on the investigation into a fraud incident and accompanying communication; and the bank’s incident report on a few suspected transactions and related correspondence, was submitted in June 2020. The bank was sent with notices requiring it to show a reason why a penalty should not be imposed for failing to follow the guidelines.
The RBI concluded that the accusations of non-compliance with/contravention of the directions were proven and merited imposition of monetary penalty after reviewing the bank’s answers, oral representations, and assessment of supplementary submissions made by the bank, the central bank said.
However, the implementation of the penalty is based on regulatory compliance shortcomings and is not meant to rule on the legitimacy of any transaction or arrangement entered into by the bank with its clients, the RBI stated.
Meanwhile, the RBI has fined Alibag Co-operative Urban Bank Limited, Raigad, and the Mahabaleshwar Urban Cooperative Bank Limited, Mahabaleshwar, respectively, Rs 5lakh and Rs 1lakh for regulatory violations.
