NEW DELHI - The Reserve Bank of India (RBI) has imposed penalties totaling over ₹50 crore on a range of financial institutions by the second week of November 2023, indicating a substantial increase in regulatory fines compared to the previous two fiscal years. Notable among those penalized are Paytm Payments Bank, L&T Finance, and Jammu & Kashmir Bank, which have all contravened RBI's stringent guidelines.
The total fines collected thus far for the fiscal year have already surpassed the ₹14 crore and ₹48 crore imposed in FY 2023 and FY 2022, respectively. These penalties contribute to the central bank's income, which saw a significant rise of 42% to ₹92,384 crore in FY 2023. The RBI's income boost comes in part from these monetary sanctions.
A detailed breakdown of recent fines reveals that by mid-November, the RBI had collected ₹51.3 crore for various infringements ranging from breaking Know Your Customer (KYC) norms to not updating records accurately. Other violations included failing to inform borrowers about loan approval interest rates and breaches of the code of conduct for directors and outsourcing financial services.
Earlier in the fiscal year, on April 7, M&M Financial Services faced a fine of ₹6.77 Crore for not disclosing loan approval interest rates. Paytm Payments Bank was fined ₹5.39 Crore on October 12, while Canara Bank incurred a penalty of ₹2.92 Crore on May 12. Jammu & Kashmir Bank and L&T Finance were each fined ₹2.5 Crore on June 23 and October 20, respectively, for various contraventions including KYC norms and customer service standards.
In addition, ICICI Bank and Kotak Mahindra Bank were fined on October 17, with amounts of ₹12.19 Crore and ₹3.95 Crore respectively for issues such as poor customer service standards and ineffective handling of recovery agents.
With five months remaining in the current fiscal year, it is projected that the total amount in fines may continue to rise. Despite this trend, the penalties still represent only a small fraction of the RBI's overall balance sheet.
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