The Reserve Bank of India has slapped a penalty of Rs 59.20 lakh on South Indian Bank for non-compliance with certain directions on 'interest rate on deposits' and 'customer service in banks'.

The regulator conducted a statutory inspection for supervisory evaluation of South Indian Bank with reference to its financial position as on 31 March 2023.

Based on supervisory findings of non-compliance with RBI directions and related correspondence, a notice was issued to South Indian Bank.

After considering the bank's reply to the notice and oral submissions made during the personal hearing, RBI found that the charges against the bank were sustained, warranting imposition of monetary penalty.

The RBI said the bank levied penal charges for non-maintenance of minimum balance/average minimum balance without notifying certain customers by SMS/e-mail or letter.

South Indian Bank also marked lien against certain NRE savings deposit accounts, the central bank said.

The RBI further said the penalty is based on deficiencies in statutory and regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Imposition of the penalty is without prejudice to any other action that may be initiated by RBI against the bank, it added.