In an announcement made on October 13, 2023, the Reserve Bank of India (RBI) has imposed financial penalties on Union Bank of India, RBL Bank, and Bajaj Finance Ltd for their failure to adhere to regulatory norms. The RBI exercised its powers granted under the Banking Regulation Act of 1949 to impose these penalties.
Union Bank of India: The RBI has imposed a penalty of Rs 1 crore on the state-run Union Bank of India for non-compliance with RBI's directives concerning 'Loans and Advances – Statutory and Other Restrictions.' The RBI's review of Union Bank revealed deviations from its guidelines, particularly in the sanctioning of a term loan to a corporation. The bank granted this loan without adequate due diligence, and it used budgetary resources allocated for specific projects inappropriately.
RBL Bank Ltd: The private sector RBL Bank has been fined Rs 64 lakh for not complying with certain directions of the RBI, particularly related to 'Prior approval for acquisition of shares or voting rights in private sector banks' under the RBI (Prior approval for acquisition of shares or voting rights in private sector banks) Directions, 2015. Additionally, the bank failed to obtain the annual declaration in Form B from a major shareholder within the specified time frames, namely for the financial years FY19, FY20, and FY21. Furthermore, RBL Bank did not provide certificates to RBI regarding the 'fit and proper' status of one of its significant shareholders by the end of the said financial years.
Bajaj Finance Ltd: Bajaj Finance Ltd has incurred a penalty of Rs 8.5 lakh for non-compliance with the 'Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016.' The regulatory audit revealed that the company did not fully adhere to RBI's guidelines, particularly in reporting and timely reporting of certain fraud incidents.
The RBI clarified that these actions are taken due to regulatory compliance issues and do not pass judgment on the validity of any transactions or agreements the banks and NBFCs entered into with their customers.
Additionally, the RBI has approved the scheme of amalgamation of The Suvikas People's Co-operative Bank Ltd, Ahmedabad, with The Kalupur Commercial Co-operative Bank Ltd, Ahmedabad.
In a related development, on October 12, 2023, the central bank imposed a fine of Rs 5.39 crore on Paytm Payments Bank for failing to comply with certain provisions of RBI guidelines related to Know Your Customer (KYC) procedures and timely reporting of cybersecurity incidents. Paytm's failure to report cybersecurity incidents promptly was one of the multiple instances where they were found to be in non-compliance with RBI guidelines.
