DCB Bank has got a heavy imposition of a fine of Rs.22 Lakhs by the RBI. DCB Bank is a private banking company. It was found out that they had violated the marketing norms laid down by the RBI for financial products. The penalty was based on an order dated 28 October. It was noted that the Bank did not comply with the provisions issued by the RBI. There was a circular release that contained the regulations on Marketing/distribution of mutual fund/insurance etc. Any violations in these regulations can lead to a strict penalty on the defaulter.
The Bank Regulation Act of 1949 has given certain important powers to the Central bank. The act of 1949 has been the core source of the rules and regulations on which the banks across India must run. The act helped to bring a form of uniformity among the banks which would prevent cut-throat competitions. Therefore, this act unites all the banks of the country which had different rules and regulations and were brought under one governing body called RBI. This is done to ensure that the banks run smoothly and best suited to the needs and the demands of the customers. This would help in strengthening the entire banking structure of India from a grassroots level. Section 47(A) and Section 46(4) of the Banking Regulation Act. According to Section 47(a), The RBI has the right to impose a penalty in case of default or contravention.
An off-site examination was conducted which revealed that the Bank had not been complying with the regulations of the RBI.RBI also gives a chance to the Banks to explain the reasons for the default or why they should be exempted from the penalty. It is only after this hearing that the RBI decides on the Penalty for the Bank.
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