RBI imposes penalties on 14 banks for various rule violations - Moneycontrol

This is probably the highest number of banks receiving RBI monetary penalties on a single day for various rule violations.

The Reserve Bank of India (RBI) on July 7 imposed monetary penalties on 14 banks including Bandhan Bank, Bank of Baroda and State Bank of India (SBI) for various rule violations, the central bank said in a press release. These 14 banks include public sector banks, private banks, foreign bank, Co-operative banks and one small finance bank.

The violations include non-compliance with certain provisions of directions issued by RBI on ‘Lending to Non-Banking Financial Companies (NBFCs)’ ‘Bank Finance to Non-Banking Financial Companies (NBFCs)’ and ‘Loans and Advances – Statutory and Other Restrictions’, the RBI said.

This is probably the highest number of banks receiving RBI monetary penalties on a single day for various rule violations. According to an industry source, the RBI penalties on these banks are mainly linked to banks' dealings with crisis-ridden Dewan Housing Finance Corporation (DHFL) and its group companies. "These violations are mainly related to DHFL," said the source.

The RBI release said a scrutiny in the accounts of the companies of a group was carried out by the RBI and it was subsequently observed that the banks had failed to comply with provisions of one or more of the aforesaid directions issued by RBI and/or contravened provisions of the Banking Regulation Act, 1949, the RBI said. The group mentioned here is mainly DHFL.

Further, notices were issued to the banks advising them to show cause as to why penalty should not be imposed for non-compliance with the directions/contraventions of provisions of Banking Regulation Act, 1949, the RBI said. Following its examination, the RBI concluded that violations warrant imposition of monetary penalty on fourteen banks, the RBI said.

 Violations also pertain to rules on ‘Creation of a Central Repository of Large Common Exposures – Across Banks’,  ‘Reporting to Central Repository of Information on Large Credits (CRILC)’, ‘Operating Guidelines for Small Finance Banks’ and for contraventions of provisions of Section 19(2) and Section 20 (1) of Banking Regulation Act, 1949, the RBI said.

Other banks upon which the monetary penalties have been imposed include Bank of Maharashtra, Central Bank of India, Credit Suisse, Indian Bank, IndusInd Bank, Karnataka Bank, Karur Vysya Bank, Punjab and Sind Bank, South Indian Bank, The Jammu and Kashmir Bank and Utkarsh Small Finance Bank.

The quantum of penalties ranges from Rs 50 lakh to Rs 2 crore each. The penalties have been imposed in exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with sections 46 (4) (i) and 51 (1), of the Banking Regulation Act, 1949, as applicable, the RBI said.

Further, this action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers, the RBI said.

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RBI imposes penalties on 14 banks for various rule violations - Moneycontrol
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