RBI Action: RBI imposed heavy fine on these 2 banks for violating the rules

RBI Action: RBI imposed heavy fine on these 2 banks for violating the rules

RBI has imposed monetary penalty on two banks. This action has been taken due to violation of rules. A bank from Madhya Pradesh is included in this list. Let us know whether this action will also affect the customers?

RBI Action: In July, the Reserve Bank of India has taken strict action against many banks and companies. Once again, monetary fines have been imposed on two banks. Madhya Pradesh’s Smriti Nagrik Sahakari Bank Maryadit (Mandsaur) is also included in this list. Apart from this, RBI has also imposed a penalty on The Batlagundu Co-operative Urban Bank Limited located in Tamil Nadu. Both have not complied with the guidelines. Some are accused of breaking the rules issued under KYC and some under SAF.

RBI has given information about this action on Monday, 28 July. Which shows that negligence in the rules will not be tolerated at all. So that the banking sector can be safe for the customers. According to the notification, a fine of Rs 2.50 lakh has been imposed on Smriti Nagrik Sahakari Bank Maryadit. At the same time, The Batlagundu Co-operative Urban Bank Limited will have to pay a fine of Rs one lakh.

This is the reason for the action (RBI Action)

Smriti Nagrik Sahakari Bank Limited:- This bank of Madhya Pradesh was not able to implement the cyber security controls prescribed by RBI under the comprehensive cyber security framework. Apart from this, it was also not able to do periodic updating of KYC of customers within the stipulated time.

The Batlagundu Co-operative Urban Bank Limited:– On the other hand, some loans were sanctioned without following the share linking norms. Whereas its CRAR was less than the regulatory minimum. Apart from this, loans and advances with risk weight of more than 100% were also sanctioned. In some cases, the applicable single borrower risk limit of new loans and advances was also violated, which does not comply with the instructions issued under SAF.

Is it a matter of concern for the customers?

RBI inspected both the banks in March 2024. During this, it was found that the banks were not complying with some guidelines properly. After which further investigation was done. Show cause notices were sent to both the banks. After considering the reply and other oral presentations, it was decided to impose penalty. However, this will not affect any transaction or agreement between the customers and the banks.