RBI takes penal action against Canara Bank

Mumbai, June 12 (UNI) The Reserve Bank of India (RBI) in exercise of the powers vested in it under the provisions of Section 47A(1)(b) of the banking regulation Act 1949 has imposed a monetary penalty of Rs five lakh only on Canara Bank for violation of provisions of Banking Regulation Act 1949.

RBI news release said that it was observed that the bank had been following an estimation method for recknoning the external liabilities under inter branch account for computation of its Demand and Time Liabilities (DTL)/Net Demand and Time Liabilities (NDTL) for the purpose of maintaing Cash Reserve Ratio (CRR)/Statutory Liquidity Ratio (SLR).

The bank had revised and introduced a proper system of reckoning the external liabilities under inter-branch account only in September 2005. Further when the bank was advised to submit revised Form A and Form VIII returns for the relevant period, the bank was unable to compile the revised returns on grounds of absence of data.

The RBI issued a Show Cause notice to the bank. In respose to the Show Cause Notice, the bank had submitted its written reply and the Chairman and Managing Director had also sought personal hearing with RBI which was granted.

On careful examination of the bank's submissions, the RBI has come to the conclusion that the aforesaid violation was substantiated and accordingly the penalty was imposed, the release added.

UNI AR PM AW1810