Case Brief
What Happened
By order dated May 29, 2023, RBI imposed a monetary penalty of ₹2.20 crore on Indian Overseas Bank. The bank was found to have contravened section 17(1) of the Banking Regulation Act, 1949 and failed to comply with RBI directions relating to prudential norms on income recognition, asset classification and provisioning, interest rate directions on deposits, and ATM security advisory requirements. RBI’s inspection (ISE 2021) found that the bank did not transfer 25% of its disclosed profit for FY 2020-21 to the reserve fund, had significant divergence between reported and assessed NPAs, offered deposit interest rates applicable to senior/super senior citizens to non-individual constituents in some instances, and did not implement end-to-end encryption controls for ATMs within the prescribed timeline. RBI concluded the contraventions were substantiated and warranted a penalty under the Banking Regulation Act.