Mumbai : The Reserve Bank of India has imposed a penalty of Rs 10 lakh on Credit Agricole – Corporate & Investment Bank and a penalty of Rs 5 lakh on Karnataka Bank Ltd for non-compliance with its directives on derivatives. The penalty on France-based Credit Agricole has been imposed for failing to carry out proper due diligence on user appropriateness and suitability of products, the RBI said in a statement. The central bank said the compliance function in the foreign bank failed to ensure strict observance of all statutory provisions contained in various legislations, issued by it in respect of derivative transactions. The penalty on Karnataka Bank has been imposed for failing to carry out proper due diligence on user appropriateness and suitability of products and failing to document the pricing, periodical valuation of products and quantifying financial risks in derivatives. The Reserve Bank had issued show-cause notice to both the banks. The banks submitted their written replies in response. On a careful examination of the banks' responses and their oral submissions made during personal hearings, the RBI found that the violations were conclusively established. The RBI, therefore, penalised these banks in exercise of the powers vested with it under the provisions of the Banking Regulation Act, 1949.
HBL
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