The Reserve Bank of India (RBI) on Friday penalised three banks, including Axis Bank, Bank of Maharashtra and Jammu & Kashmir Bank.

A penalty of Rs 2.5 crore was imposed on Jammu and Kashmir Bank for non-compliance with certain directions issued by the RBI, including one related to 'time-bound implementation and strengthening of SWIFT-related operational controls'.

According to RBI's inspection, J&K Bank non-complied in --- (i) failed to ensure integrity and quality of data submitted to CRILC (Central Repository of Information on Large Credits), (ii) extended term loans to a corporation (a) without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects are sufficient to take care of the debt servicing obligations and (b) failing to ensure that the repayment/servicing of said term loans were not made out of budgetary resources and (iii) created financial/non-financial messages in SWIFT without first ensuring that the underlying transactions have been duly reflected in the CBS.

Bank of Maharashtra was slapped a fine of Rs 1.45 crore for non-compliance with certain directions issued by RBI on ‘Loans and Advances Statutory and Other Restrictions' and Advisory on ‘Man in the Middle (MiTM) Attacks in ATMs'.

The state-owned bank committed non-compliance in the extent of --- (1) it sanctioned a term loan to a Corporation (i) in lieu of or to substitute budgetary resources envisaged for certain projects; (ii) without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were sufficient to take care of the debt servicing obligations; and (iii) the repayment/servicing of which was made out of budgetary resources, and (2) it failed to implement required control measures for ATMs relating to end-to-end encryption of communication between the ATM terminal/PC and the ATM Switch, within the prescribed timeline.

In another statement, the RBI said a penalty of Rs 30 lakh has been imposed on Axis Bank. The lender, it said, had levied penal charges in certain accounts for late payment of credit card dues though the customers had paid by the due date, through third-party platforms.

The RBI, however, said penalties are based on deficiencies in regulatory compliance and not intended to pronounce upon the validity of any transaction or agreement entered into by the entities with their customers.