The RBI has taken a tough stand against banks and NBFCs. Monetary penalties have been imposed for non-compliance. This action was taken due to violations of several banking regulations, including KYC. Let’s find out if you have an account with one of these?
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RBI Action: The Reserve Bank of India (RBI) has taken strict action against three public sector banks. Heavy monetary penalty has been imposed on them for non-compliance of rules. These banks are located in Karnataka, Tamil Nadu and Bihar. Apart from this, penalty has also been imposed on Glomor Finance Private Limited located in Odisha. The central bank has given this information through a press release on November 20.
The Navada Central Co-operative Bank Limited, Bihar has been fined Rs 1.50 lakh. One lakh rupees has been imposed on Sri Basheshwar Sahakari Bank Niyamitha Bagalkot Karnataka and Rs 50,000 has been imposed on The Big Kanchipuram Co-operative Town Bank Limited.
NABARD and the RBI conducted inspections on March 31, 2024, to assess the banks’ financial health. This inspection revealed that the banks were not properly complying with certain guidelines issued by the RBI. Based on the inspection report, notices were issued to these banks, asking them to explain why they should not be fined for violating these rules. A personal hearing was subsequently held. Based on the banks’ responses and oral presentations, the allegations were found to be true. Consequently, the RBI decided to impose penalties.
What is the reason? (RBI Action 2025)
The Navada Central Co-operative Bank Limited did not transfer eligible unclaimed amounts to the Depositors’ Education and Awareness Fund. It also failed to provide its customers’ credit information to credit information companies.
Sri Basheshwara Sahakari Bank Niyamitha failed to classify certain loan accounts as non-performing assets as per the Income Recognition Asset Classification and Provisioning norms. It also failed to open certain savings deposit accounts in the names of ineligible entities.
The Big Kanchipuram Co-operative Town Bank Limited failed to upload its customers’ KYC records to the Central KYC Records Registry within the stipulated timeframe.
Glomor Finance Private Limited violated these rules.
The company failed to obtain prior written permission from the RBI to effect management changes. This resulted in the replacement of over 30% of its directors, excluding independent directors. Upon substantiating the allegations, the RBI imposed a fine of ₹4 lakh. The central bank also clarified that this action will not affect the validity of any transaction or agreement between the bank and the customer.
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