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RBI Slaps ₹3.20 Lakh Fine on Citibank for Breaching FEMA Guidelines.

Banking & Finance | Dated: 17 Apr 2025

In April 2025, the Reserve Bank of India (RBI), headquartered in Mumbai, Maharashtra, imposed a monetary penalty of ₹3.20 lakh on Citibank N.A., a banking institution based in New York, United States of America (USA), for violating provisions under the Foreign Exchange Management Act (FEMA), 1999.

🎯 Key Highlights:

- The penalty was imposed for contravention of Section 10(4) of FEMA, 1999, which outlines the obligations of authorized persons to ensure compliance with rules related to foreign exchange dealings.
- The RBI found that Citibank N.A. failed to conduct proper due diligence while processing inward remittances originating from a Foreign Currency Account held by one of its clients. This lapse was considered a breach of regulatory norms meant to prevent misuse of cross-border fund flows.
- As per the provisions of Section 11(3) of FEMA, the RBI exercised its authority to levy the fine, emphasizing the need for vigilance and compliance among authorized dealers of foreign exchange.

💡 Other Important Facts:

(i) Prior to the imposition of the penalty, the RBI had issued a Show Cause Notice to Citibank N.A., requesting justification for the suspected violation. The bank submitted a written response and also provided oral submissions during the proceedings.
(ii) After a thorough evaluation of the case and the explanations provided, the RBI determined that the violation was established, and thus proceeded with the monetary penalty.
(iii) This action highlights RBI’s ongoing commitment to enforcing strict compliance with FEMA guidelines to ensure transparency and due diligence in foreign exchange transactions.

📚 Test Your Knowledge:

Which bank was recently penalized ₹3.20 lakh by the RBI for violating FEMA guidelines?

Correct Answer: Citibank N.A.

🚀 Quick Recap:

About RBI

Governor : Sanjay Malhotra
Headquarter : Mumbai