The Reserve Bank of India (RBI), the country's central bank, Friday said it had imposed a penalty of Rs.500,000 on the private sector ING Vysya Bank Ltd for violation of banking regulations.

The RBI had earlier issued a show cause notice to ING Vysya Bank, a joint venture between Dutch financial major ING and Indian business group Vysya, said a statement issued here.

"In response thereto, the chief executive officer had sought a personal hearing, which was given. This was followed by a written submission by the bank," said the RBI statement.

On careful examination of the submissions, the RBI concluded that the violations were substantiated and penalty was imposed, it added.

The RBI held that the bank had not deducted the full amount of unamortised VRS (voluntary retirement scheme) expenditure, violating the central bank's instructions.

The bank had also contravened RBI guidelines in financing promoters' contribution and offering interest concession to the borrowers availing of insurance products floated by its group company.

In October 2004, as part of the measures to improve the transparency of banks, the RBI had announced its decision to disclose information on penalties imposed on banks after the due process of advising the bank concerned.