RBI Action: In December, the RBI once again tightened its grip on banks and NBFCs. Penalties were imposed for violating regulations. Let’s find out if your account is included in this and whether this will affect customers.
RBI Action: The RBI has taken strict action against Jammu & Kashmir Bank Limited for non-compliance with regulations. Established in 1938, it currently operates over 1,000 branches and 1,400 ATMs. The RBI has imposed a penalty of ₹99.30 lakh on the bank for violating KYC regulations. A notification has also been issued in this regard.
An inspection of the bank’s financial position as of March 31, 2024, revealed non-compliance with regulations. A show-cause notice was subsequently issued. Based on the responses received to the notice and the submissions made during the personal hearing, all allegations were found to be true. Consequently, the RBI decided to impose the penalty.
These rules were not followed.
The bank did not forward some complaints that were partially or completely rejected by its internal complaint system to the Internal Ombudsman for a final decision. The bank also did not send final letters to its customers regarding the resolution of their complaints. Thus, it failed to ensure that customers were aware of their rights to contact the Ombudsman if they were dissatisfied with the bank’s response.
The bank also did not transfer eligible amounts to the Deposit Education and Awareness Fund in certain accounts within the prescribed limits. Furthermore, the bank did not have face matching technology in its video-based customer identification process, resulting in the failure to verify customer submitted economic and financial profile information.
Penalties imposed on these companies
The RBI imposed penalties of ₹310,000 on Truehome Financial Limited, ₹310,000 on Kirtan Finserve Limited, and ₹620,000 on Bansal Credit Limited. All three companies failed to comply with RBI-issued KYC guidelines. Truehome Financial Limited failed to obtain a Permanent Account Number (PAN) or equivalent e-document or Form No. 60 for certain loan accounts.
Kirtan Finserve Limited failed to obtain prior written approval from the RBI during director appointments, resulting in the replacement of more than 30% of its directors, excluding independent directors. Bansal Credit Limited failed to upload its customer KYC records to the Central KYC Records Registry within the stipulated timeframe and failed to develop a robust system for identifying, monitoring, and reporting suspicious transactions and sending alerts.
Will customers be affected?
The RBI regulates all banks and non-banking financial companies in the country. It takes strict action against violations. The sole purpose of this action is to protect the interests of customers in the banking sector, not to cause them harm. Therefore, the central bank has clarified that this action is based on deficiencies in regulatory rules. It will not impact any transactions or agreements between customers and banks.
