Reserve Bank of India penalizes Nainital Bank and Ujjivan SFB for regulatory violations
The penalties, imposed under the Banking Regulation Act, of 1949, follow RBI’s statutory Inspection for Supervisory Evaluation (ISE 2023), which assessed their financial positions as of March 31, 2023.
Reserve Bank of India penalizes Nainital Bank and Ujjivan SFB for regulatory violations
The Reserve Bank of India has imposed monetary penalties on Ujjivan Small Finance Bank Limited and The Nainital Bank Limited for non-compliance with key regulatory norms related to loans, interest rates, and customer service.
The penalties, imposed under the Banking Regulation Act, of 1949, follow RBI’s statutory Inspection for Supervisory Evaluation (ISE 2023), which assessed their financial positions as of March 31, 2023.
Ujjivan Small Finance Bank has been fined Rs 6.70 lakh for failing to issue loan agreements to certain borrowers at the time of loan sanction or disbursement.
This contravenes RBI’s guidelines under ‘Loans and Advances - Statutory and Other Restrictions’. The penalty was imposed after the bank was allowed to respond to the findings, but its explanations were deemed unsatisfactory.
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Meanwhile, the Nainital Bank Limited has been handed a significantly larger penalty of Rs 61.40 lakh for breaching RBI directions on ‘Interest Rate on Advances’ and ‘Customer Service in Banks’.
The bank has failed to benchmark some floating rate loans extended to MSMEs against an external benchmark rate, as mandated by RBI and it imposed flat penal charges for non-maintenance of minimum balance in savings accounts instead of proportionate charges based on the shortfall, violating customer service guidelines.
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