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The Reserve Bank of India (RBI) has imposed a series of monetary fines on several financial institutions for contravention of its regulations. The penalties, totaling Rs1.25 crore, were levied against Punjab National Bank (PNB), Federal Bank, Mercedes-Benz (OTC:) Financial Services India Pvt Ltd, and Kosamattam Finance Ltd.
PNB bore the brunt of the fines with a penalty of Rs72 lakh. The RBI’s risk assessment report (RAR) and inspection report (IR) indicated that PNB had violated rules surrounding deposit and advance interest rates. The bank also contravened the master circular on customer service norms by levying unwarranted SMS charges and failing to adhere to interest rates in term deposit accounts. Furthermore, PNB did not specify the interest reset date in the marginal cost of funds-based lending rate (MCLR) linked loans.
Federal Bank was fined Rs30 lakh for non-compliance with know-your-customer (KYC) norms. The bank was found issuing demand drafts without including the purchaser’s name, a clear violation of RBI’s KYC regulations.
Mercedes-Benz Financial Services India Pvt Ltd was penalized Rs10 lakh for not diligently updating the KYC of its high-risk customers. This lack of adherence to the KYC Direction, 2016 resulted in the fine.
Kosamattam Finance Ltd, a significant non-deposit-taking company, was fined Rs13.38 lakh for not maintaining a 75% loan-to-value (LTV) ratio in certain gold loan accounts. The company also failed to comply with specific directions for Non-Banking Financial Companies (NBFCs), specifically the ‘Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016’.
These penalties underscore RBI’s commitment to enforcing regulatory norms and maintaining the integrity of the financial sector.
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