RBI Imposes Penalty of Rs. 1 Crore on Jio Payments Bank Over Rule Violation

The Reserve Bank of India (RBI) on Wednesday, October 28 imposed a monetary penalty on Jio Payments Bank for rule violation. The bank has imposed a penalty of Rs. 1 crore for non-compliance with RBI directions on timely submission of application in the case of reappointment of Managing Director and Chief Executive Officer under Section 35B of the Banking Regulation Act, 1949 (the Act), the RBI stated in a statement. “The penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A (1)(c) read with Section 46 (4)(i) of the Banking Regulation Act, 1949,” the RBI said. “This action is based on the 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,” added RBI.

An off-site examination of the records pertaining to the para-banking activity of the bank was conducted by the RBI in a matter related to default on the National Spot Exchange Limited (NSEL). According to the guidelines, Jio Payments Bank was required to submit an application under Section 35B of the Act in the case of reappointment of MD & CEO of the bank four months prior to the date on which the term of the MD & CEO was to expire. The off-site examination and the related correspondence revealed non-compliance with

This action is based on the 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

above-mentioned directions issued by the RBI. In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the directions, said RBI.

The central bank also said “After considering the bank’s reply to the notice, oral submissions made in the personal hearing, and examination of additional submissions, the RBI concluded that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty”.

The RBI has taken enforcement actions against 41 regulated entities by imposing an aggregate penalty of Rs. 61.15 crore between July 1, 2019, and June 30, 2020. Earlier this year, in its annual report the central bank said that the actions were taken against regulated entities for non-compliance of various regulations. Against public sector banks, a total of 26 penal actions were taken with an aggregate fine of Rs. 38.35 crore and eight penal actions were initiated against private sector banks with an aggregate fine of Rs. 8.55 crore. During the period a total fine of Rs. 5 crore was imposed on two foreign banks, while 13 penal actions were taken against cooperative banks with imposition of Rs. 9.18 crore. The penalty of Rs. 1 crore on Jio Payments Bank is an addition to the aforementioned data.