RBI Action: This fine has been imposed on Nainital Bank due to non-compliance of rules related to interest rates on advances and customer service by the bank. The bank did not link some floating rate loans, which were given to MSMEs, to external benchmark rates.
RBI Action: The Reserve Bank of India (RBI) has imposed a fine on Shriram Finance, Nainital Bank and Ujjivan Small Finance Bank. This action has been taken for not following the regulatory guidelines. The central bank has imposed a fine of ₹ 61.40 lakh on Nainital Bank. Apart from this, a fine of Rs 6.70 lakh has been imposed on Ujjivan SFB and ₹ 5.80 lakh on Shriram Finance.
Why was a fine imposed on Nainital Bank?
This fine has been imposed on Nainital Bank for not following the rules related to interest rate on advances and customer service by the bank. The bank did not link some floating rate loans, which were given to MSMEs, to the external benchmark rate. Also, the penalty for not maintaining the minimum balance in savings accounts was imposed as a flat rate, whereas this fine should have been in proportion to the amount of the shortfall.
These are the allegations against Ujjivan SFB and Shriram Finance
Apart from this, Ujjivan Small Finance Bank has been fined because it failed to issue loan agreements to some borrowers at the time of loan approval/disbursement. At the same time, Shriram Finance did not make arrangements for regular review of risk categorization of accounts, as well as this fine was imposed due to other irregularities.
The central bank RBI said that this action is based on deficiencies in compliance with regulatory rules and is not intended to comment on the validity of any transaction or agreement made by the bank with its customers. The regulator said, “Furthermore, the decision of monetary penalty is separate from other actions that may be initiated against the bank by RBI.”
