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The Reserve Bank of India on Wednesday has imposed, monetary penalty of Rs 1 million on South Indian Bank Limited (the bank) for non-compliance with directions issued by RBI on ‘Guarantees and Co-acceptances’. This action is based on 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 statement said, "RBI had received references from a government department and a private party alleging non-payment of invoked Bank Guarantees by the bank.
Examination in this regard revealed violation of RBI directions on ‘Guarantees and Co-acceptances’ and a Notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the directions." The press release said that, "After considering the bank’s reply, oral submissions made during the personal hearing and additional submission made by the bank after the personal hearing, RBI came to the conclusion that the aforesaid charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty."