Credit Agricole – Corporate & Investment Bank

RBI imposed penalties on two banks for violations of its directives on derivative transactions. Credit Agricole – Corporate & Investment Bank was penalised for failing to carry out proper due diligence on user appropriateness and suitability of products, and for a compliance function that failed to ensure strict observance of statutory provisions and RBI-issued requirements for derivative transactions. Karnataka Bank Limited was penalised for failing to carry out proper due diligence on user appropriateness and suitability of products and for failing to document product pricing, periodical valuation, and quantification of financial risks in derivatives. The RBI issued show-cause notices, considered written replies and oral submissions, and concluded the violations were established under Section 47A(1)(b) read with Section 46(4)(i) of the Banking Regulation Act, 1949.

Both banks must bear the monetary penalties and address the compliance gaps identified by RBI in their derivatives business. The action has no direct operational restriction described in the release, but it signals closer supervisory scrutiny of derivative suitability, documentation, and compliance controls going forward.