Reserve Bank of India imposes monetary penalty on Corporation Bank

Case Brief

The Reserve Bank of India imposed a monetary penalty of ₹1 crore on Corporation Bank by order dated July 31, 2019. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949, for non-compliance with RBI directions on Cyber Security Framework in Banks and Frauds Classification and Reporting by commercial banks and select FIs. RBI stated that a report of a cyber security incident involving fraudulent transactions using a cancelled debit card showed that the bank had not complied with the applicable directions. After issuing a show-cause notice and considering the bank’s reply and oral submissions, RBI concluded that the charges were substantiated and warranted the monetary penalty. The release also clarifies that the action concerns regulatory non-compliance and does not pronounce on the validity of any transaction or agreement with customers.