RBI slaps penalty on Central Bank of India; do customers need to worry?

The Central Bank of India allegedly limited the liability of customers in unauthorised electronic banking transactions.

New Delhi: The Reserve Bank of India, on Friday (April 22), said that the regulator has slapped a fine of Rs 36 lakh on the Central Bank of India for violating norms on customer protection. In an official notification dated April 18, 2022, the RBI said it imposed a monetary penalty of Rs 36 lakh on the public sector bank for non-compliance with certain directions on 'Customer Protection’. 

According to the RBI notification, the Central Bank of India limited the liability of customers in unauthorised electronic banking transactions. The regulator pointed out that the penalty has been imposed under the provisions of the Banking Regulation Act, 1949. 

"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. 

It was also mentioned in the notification that RBI had conducted a statutory inspection for supervisory evaluation of the bank with reference to its financial position as of March 31, 2020.

The regulator also revealed the non-compliance with the relevant directions to the extent the bank failed to credit (shadow reversal) the amount involved in the unauthorised electronic transaction to the customer's account within 10 working days from the date of notification by the customer, it said.

RBI also pointed out that the regulator had sent a notice to the Central Bank of India advising it to show cause as to why the penalty should not be imposed on it for failure to comply with the said directions. Also Read: Bank Holidays in May 2022: Banks to remain shut for 10 days; Full list here

"After considering the bank's reply to the notice, oral submissions made in the personal hearing and examination of additional submissions made by it, RBI came to the conclusion that the aforesaid charge of non-compliance with the aforesaid RBI directions were substantiated and warranted imposition of monetary penalty, to the extent of non-compliance with such directions," said the release. Also Read: Old coin sells for Rs 30,500! Know what is so special about it and how you can sell your collectables

As of now, RBI hasn't pointed out if bank customers need to worry about non-compliance with customer protection rules. The Central Bank of India is also yet to update the customers about the same.