RBI has issued a press release saying that in an order given on March 13, a fine of Rs 63 lakh 60 thousand has been imposed on DCB Bank, the reason behind which was non-compliance of the bank’s rules. A fine of Rs 1.31 crore has been imposed on Tamilnad Mercantile Bank.
Central bank Reserve Bank of India (RBI) has imposed fine on two banks on Tuesday. DCB Bank Ltd regarding non-compliance. And Tamilnad Mercantile Bank Ltd. A fine has been imposed. RBI has imposed a fine of Rs 63,60,000 on DCB Bank. Whereas Tamilnad Mercantile Bank has to pay a fine of Rs 1,31,80,000 crore.
Why has DCB Bank been fined?
RBI has issued a press release saying that in an order given on March 13, a fine of Rs 63 lakh 60 thousand has been imposed on DCB Bank, the reason behind which was non-compliance of the bank’s rules. The bank did not follow some specific instructions of RBI regarding ‘Interest Rate on Advances’. The financial position of the bank till March 31, 2022 was investigated by RBI under the provisions, after which violations of the rules were detected. Investigation revealed that the bank had not reset the interest rates on MCLR linked floating rate advances within a stipulated period. Additionally, it failed to set the interest rates on some floating rate retail loans and floating rate loans to MSMEs at the external benchmark lending rate.
Why has Tamilnad Mercantile Bank been fined?
Tamilnad Mercantile Bank has been fined more heavily because there were many allegations against it. RBI said that its investigation revealed that the bank failed to set the interest rate of some floating rate retail loans and floating rate loans to MSMEs at the external benchmark lending rate. With this he created several benchmarks in the same loan category. Some fixed floating rate loans were not priced based on the benchmark rates applicable. And finally CRILC reported incorrect external ratings of certain borrowers.
What will be the impact on customers?
RBI has said in its order that this action has been taken on the basis of lack of regulatory compliance. And it is not intended to affect the validity of any transaction or agreement entered into by the Bank with its customers. Further, the bank has said that the imposition of penalty will not have any adverse effect on any other action initiated by the RBI against the bank.
