The Reserve Bank of India has imposed a penalty of Rs.10 lakh (Rupees Ten Lakh only) on Credit Agricole – Corporate & Investment Bank and a penalty of Rs. Five lakh (Rupees five lakh only) on Karnataka Bank Limited for non-compliance with its directives on derivatives.
The penalty on Credit Agricole – Corporate & Investment Bank has been imposed for failing to carry out proper due diligence on user appropriateness and suitability of products and the compliance function in the bank failing to ensure strict observance of all statutory provisions contained in various legislation, issued by the Reserve Bank in respect of derivative transactions.
The RBI has hiked its base rates recently in order to control the growing inflation. The earlier hikes have already leaded to the slowdown in loan business of the banks; it has also made it mandatory for all banks to increase their loan rates (home loan, personal loan, business loans, vehicle loan etc.)