The RBI has taken a tough stand against two banks. On the first of December, it imposed penalties for violating banking rules. Let’s explore why the Reserve Bank has taken this step and will it affect customers?
RBI Action: The Reserve Bank of India (RBI) continued its action in December. On Monday, two Tamil Nadu-based banks were fined. The RBI announced this action through a press release. In March 2024, an inspection was conducted to assess the financial health of both banks, revealing non-compliance with regulatory requirements.
Based on the investigation report, show-cause notices were issued to the two banks. A personal hearing was also held. Based on the responses to the notices and the presentations made, the allegations were confirmed. The decision to impose penalties was subsequently made. The Kallidaikurichi Co-operative Urban Bank Limited was fined ₹50,000. The Arani Co-operative Town Bank Limited was fined ₹2 lakh.
What is the reason?
The Arni Co-operative Town Bank Limited allowed its members to refund share capital even though its CRAR was below the SEBI regulatory minimum. Furthermore, it approved some loans without complying with share linking to borrowing norms. It also approved loans exceeding the regulatory limit. It approved gold loans exceeding the regulatory limit under the bullet repayment scheme. Meanwhile, The Kallidaikurichi Co-operative Urban Bank Limited allowed its members to refund share capital even though its CRAR was also below the regulatory minimum.
What will be the impact on customers?
The RBI regulates all banks in the country and ensures proper compliance with regulations to protect customer interests and prevent any problems in the banking sector. Therefore, inspections are conducted to check the financial status. However, this action will not impact customers, the central bank has confirmed. Customers can continue with their transactions and agreements with the bank as before.
See RBI action notification here
Read More: iPhone Fold leak reveals price, battery, display, everything you need to know
