RBI slaps Rs 1.95-cr fine on StanChart for lapses in compliance

The examination of the risk assessment report, inspection report and all related correspondence revealed non-compliance with directions issued by the regulator

The Reserve Bank of India (RBI) on Monday imposed a fine of Rs 1.95 crore on the Indian operations of Standard Chartered Bank for non-compliance with multiple regulatory directions. The foreign bank was found to be non-compliant with directions pertaining to reversal of the amount involved in unauthorised electronic transactions and reporting of cyber security incidents, among others.

The statutory inspection for supervisory evaluation of the bank was conducted by the RBI with reference to its financial position as on March 31, 2020. The examination of the risk assessment report, inspection report and all related correspondence revealed non-compliance with directions issued by the regulator.

The non-compliance pertained to failure to credit (shadow reversal) the amount involved in unauthorised electronic transactions, not reporting cyber security incident within the prescribed time period, authorising direct sales agents to conduct KYC verification, and failure to ensure integrity and quality of data submitted in the central repository of information on large credits.

“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 contravention of / non-compliance with the aforesaid directions, as stated therein. After considering the bank’s replies to the notice, oral submissions made during the personal hearing, and additional submissions made by the bank, the RBI came to the conclusion that the charge of contravention of / non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank, to the extent of non-compliance with the aforesaid directions,” the RBI said on its website.