Standard Chartered Bank was fined Rs 1.95 crore by the Reserve Bank of India on Monday for failing to be compliant with the recommendations provided for consumer safety, cyber security, credit card operations, and the development of a single repository for major exposures.
The RBI performed a mandatory review of the bank's records and found that Standard Chartered had neglected to credit the money involved in the unauthorised electronic transactions back to client accounts, according to the inspection report. The bank also failed to notify cyber security issues inside the required time frame, according to the regulator's investigation. The RBI also discovered that the foreign lender was also non-compliant in approving direct sales representatives to undertake KYC verification and failed to guarantee the accuracy and quality of data provided in the Central Repository of Information on Large Credits during a statutory examination of the bank's accounts (CRILC).
The penalty was issued in the execution of RBI's powers under section 47 A (1) (c) of the Banking Regulation Act, 1949, read with section 46 (4) I of the Banking Regulation Act, 1949. This action is purely based on regulatory compliance issues and is not meant to be a judgement on the legality of any transaction or agreement between the bank and its clients.
RBI said that it had issued a notice to the bank advising it show cause or reason as to why a penalty should not be imposed upon the bank, and after taking into account the Standard chartered bank's responses to the notifications issued, the oral comments made during the personal hearing, and the lenders' supplementary submissions, they determined that the charge of contravention was proved against the bank and that a monetary penalty should be imposed on the bank.
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