The non-compliance with the directions of the Reserve Bank of India on KYC-know your customer norms, a penalty of Rs.20 million as fine have been slapped on IOB. "The penalty has been imposed in exercise of powers vested in RBI under provisions of Section 47A(1)(c) read with Section 46(4)(1) of Banking Regulation Act, 1949 taking it into account failure of the bank to adhere to the aforesaid directions guidelines issued by RBI" as per the press release by Central Bank.
On examination of the documents including the bank's internal inspection report, it is found non-compliance with the directions of RBI on KYC norms by IOB. RBI issued a show cause notice as to why the penalty should not be levied. Seeking IOB's reply, giving enough room for explanation, RBI levied Rs.20 million as a penalty.