IOB failed to make minimum mandatory transfer of a sum equivalent to 25% of its disclosed profit for the year 2020-21 to its reserve fund and there was significant divergence between the NPAs, as reported by it and as assessed by the inspection.

Further, the bank offered interest on deposits of non-individual constituents at rates applicable to senior / super senior citizens, in certain instances, and it failed to implement control measures for ATMs relating to end-toend encryption of communication between the ATM terminal/PC and the ATM Switch, within the timelines prescribed.

In furtherance to the same, two notices were issued to the bank by the RBI advising it to show cause as to why penalty should not be imposed.

After considering the bank's replies to the notices, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI came to the conclusion that the aforementioned charges of contravention/ non-compliance were substantiated and warranted imposition of monetary penalty on the bank.

In a filing Reserve Bank said, “This penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with sections 46 (4) (i) and 51 (1) of the Banking Regulation Act, 1949.”

“This action is based on the deficiencies in regulatory compliance observed and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers,” the central bank said in a filing.

Indian Overseas Bank is engaged in the business of banking & financial services.

The public sector bank reported 17.7% rise in net profit to Rs 650.07 crore on 15.8% increase in total income to Rs 6,622.42 crore in Q4 FY23 over Q4 FY22.

Shares of Indian Overseas Bank were down 0.75% to Rs 25.19 on the BSE.