Citibank slapped with a Rs 3.2 lakh fine by RBI

The Reserve Bank of India (RBI) has imposed a penalty of Rs 3.20 lakh on Citibank N A for failing to conduct proper due diligence while handling inward remittances from a foreign currency account opened by a constituent. The account was allegedly opened in violation of a provision under the Foreign Exchange Management Act (FEMA). The RBI issued a show cause notice to Citibank after which the bank submitted a written reply and made oral submissions. Following a thorough review of the facts and the bank’s response, the RBI concluded that the violations were substantiated and therefore imposed the penalty. It is important to note that the RBI’s action does not aim to invalidate any transactions or agreements entered into by the bank with its customers. The penalty is a measure to ensure that the bank adheres to the required standards and regulations in its operations. The incident highlights the importance of proper due diligence and compliance with regulations in the financial sector to ensure stability and confidence in the system. The RBI’s action sends a strong message to banks and other financial institutions to maintain high standards of governance and compliance.