Since the inception of a separate Enforcement department to regulate the violation in banking norms by various banks, Central Bank’s punitive against against the defaulters have substantially increased.
In April 2017, RBI created a separate enforcement department to supervise the banks whether they are following the norms or not, as prescribed by the RBI. Over a period of last two years since its birth, the department has issued 128 penalties against financial institutes of all kinds whether banks or Non-Banking Financial Corporations(NBFC) and through these fines the bank has gathered almost ₹150 Crores.
In 2016, 13 penalties were issued by RBI which resulted into a fine of around ₹1.21 Crore.
The situation has changed very drastically in 2019, as according to some reports around 27 penalties have been issued between 1 January to 15 February 2019. These 27 penalties resulted into gross fine of around ₹25 Crore. Such high numbers of penalties show very apparently the hike in imposed penalties by RBI since April 2017.
“This is a new type of supervision and enforcement. For long time typically, the central bank used to take an overall view of the bank’s violations and not on each violation. But today the number of transactions that each bank and each of its branches process is significantly higher. Given that financial regulations, including securities market, have become tougher over time the RBI now applies penalties for each violation,” commented R. Gandhi, Former deputy director RBI.