RBI press release regarding the penalty imposed on Bank of Baroda in May 2025

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⚖️ RBI Imposes ₹61.40 Lakh Penalty on Bank of Baroda for Regulatory Non-Compliance

📅 Date: May 2, 2025
🏦 Issued By: Reserve Bank of India (RBI)
📝 Type: Press Release – Monetary Penalty
🔍 Reference: RBI Order dated April 29, 2025

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🧾 Overview

The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹61.40 lakh on Bank of Baroda for non-compliance with specific regulatory directions related to:

1. Financial Services Provided by Banks

2. Customer Service in Banks

3. Interest Rate on Deposits

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📌 Key Findings from RBI Inspection (ISE 2023)

The penalty follows the findings of RBI’s Statutory Inspection for Supervisory Evaluation (ISE) 2023, conducted with reference to the bank’s financial position as on March 31, 2023.

The violations include:

1️⃣ Incentives in Insurance Services

Bank of Baroda failed to ensure that staff engaged in insurance corporate agency services were not paid incentives (non-cash) by insurance companies, violating the fair business practices norms.

2️⃣ Interest Not Credited to Dormant Accounts

The bank did not credit interest in some inoperative/dormant/frozen savings deposit accounts at the required intervals as mandated by RBI regulations.

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⚖️ Legal Basis for Penalty

The action was taken under:

• Section 47A(1)(c) of the Banking Regulation Act, 1949

• Read with Sections 46(4)(i) and 51(1)

The penalty is not a judgment on the validity of customer agreements or specific transactions, but a response to regulatory deficiencies.

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🧠 What This Means

🔸 This move highlights RBI’s strict regulatory stance on customer service and ethical practices in financial services.
🔸 Banks are expected to adhere to compliance not only in lending and deposit operations but also in third-party service offerings like insurance distribution.
🔸 Interest payments in dormant/inoperative accounts must continue as per RBI norms, safeguarding customers who may not be actively transacting.

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📢 Official Statement

“This action is based on 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.”
– Puneet Pancholy, Chief General Manager, RBI

RBI Letter of Penalty BOB Bank

 

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📌 Conclusion

While Bank of Baroda remains one of India’s largest public sector banks, this penalty serves as a reminder to all banks to maintain high standards in compliance, transparency, and customer service. Regulatory vigilance by RBI is expected to continue, especially with growing complexity in banking operations.

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🔎 Tags:

#RBI #BankofBaroda #RegulatoryAction #MonetaryPenalty #BankingCompliance #CustomerService #FinancialNews #DormantAccounts #InsuranceSales #RBI2025

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