RBI Imposes Monetary Penalties On 4 Banks For Non-Compliance
The Reserve Bank of India (RBI) took stringent measures against Dhanlaxmi Bank, Punjab and Sind Bank, and ESAF Small Finance Bank, imposing monetary penalties for various non-compliances, on 12 January.
The penalties were issued based on identified deficiencies in regulatory compliance, emphasising the need for financial institutions to adhere to prescribed guidelines.
Dhanlaxmi Bank faced a penalty of Rs 1.20 crore for failure to comply with specific directions related to 'Loans and Advances – Statutory and Other Restrictions', Know Your Customer (KYC) norms, and regulations governing interest rates on deposits. The RBI, utilising its authority under the Banking Regulation Act, 1949, enforced this penalty.
Punjab and Sind Bank also found itself penalised, with a fine of Rs 1 crore for non-compliance with specific directions concerning 'Loans and Advances – Statutory and Other Restrictions'.
ESAF Small Finance Bank received a penalty of Rs 29.55 lakh for not adhering to the RBI's directives on 'Customer Service in Banks'. The RBI clarified that these actions are rooted in identified deficiencies in regulatory compliance and are not intended to pass judgement on the validity of any transaction or agreement between the bank and its customers.
Importantly, the RBI underscored that the penalties serve as a regulatory response to adherence lapses and do not implicate the validity of transactions or agreements between the banks and their customers.
In a separate incident on 11 January, the RBI took a contrasting step by deciding to waive the Rs 5 crore penalty previously imposed on Bank of Baroda (BOB).
This penalty, disclosed by BOB on 22 December 2023, was linked to a shortfall in handling soiled note remittances, highlighting issues in managing notes that had undergone normal wear and tear.
The RBI's decision to waive the penalty for BOB reflects a nuanced approach, acknowledging remedial actions taken by the bank to address the concerns identified earlier. The central bank continues to assert its commitment to maintaining the integrity of the banking system through regulatory oversight and measured enforcement actions.
