The Reserve Bank of India (RBI) has imposed monetary penalties on several banks and non-banking financial companies for violating regulatory guidelines. According to the statement issued by the central bank, a penalty of ₹ 32.50 lakh has been imposed on public sector Bank of Maharashtra, ₹ 29.60 lakh on DCB Bank and ₹ 63.60 lakh on CSB Bank. Additionally, a penalty of ₹3.80 lakh has been imposed on Navi Finserv and ₹5.30 lakh on IIFL Finance. Now these banks will have to deposit the fine amount within the stipulated time.
Why was the action taken?
The action was taken against Bank of Maharashtra because the bank did not provide member-level data related to Self Help Group (SHG) members to credit information companies. Additionally, in some accounts the actual beneficial owners were not correctly identified. In the case of CSB Bank, RBI found that the bank arranged for activities with Business Correspondents that were outside their prescribed scope. Moreover, in some savings accounts, clear information was not given to customers in advance while charging fees.
These banks made this mistake
DCB Bank did not adhere to the prescribed loan-to-value (LTV) ratio in some non-agriculture gold loan accounts, leading to penalty. At the same time, IIFL Finance did not classify some accounts as ‘Non-Performing Asset’ (NPA) during loan restructuring. Navi Finserv, on the other hand, is accused of contacting customers at inappropriate times to recover dues and did not follow the prescribed protocol while sending messages. The Reserve Bank clarified that these penalties have been imposed on the basis of regulatory deficiencies. Their objective is to ensure transparency and compliance in the banking and financial system, and not to question the validity of any transaction made with customers.
The Reserve Bank of India reviews banks from time to time and takes legal action against them if found guilty of any lapses or violations of rules. Imposes heavy fine. Many times even the licenses of co-operative banks get canceled.
Latest Business News