look news india
Central bank Reserve Bank of India (RBI) has imposed fine on two banks on Tuesday. DCB Bank Limited regarding non-compliance. And fine has been imposed on Tamilnad Mercantile Bank Limited. RBI has imposed a fine of Rs 63,60,000 on DCB Bank. Whereas Tamilnad Mercantile Bank will have to pay a fine of Rs 1,31,80,000 crore.
Why has penalty been imposed on DCB Bank?
RBI has issued a press release saying that in the order given on March 13, a fine of Rs 63 lakh 60 thousand has been imposed on DCB Bank, the reason behind which was non-compliance of the bank's rules. The Bank did not follow certain specific instructions of RBI regarding 'Interest Rate on Advances'. Under the provisions, the financial position of the bank was examined by RBI till March 31, 2022, after which violations of the rules were found. The investigation revealed that the bank had not reset the interest rates on MCLR linked floating rate advances within the stipulated period. Additionally, it failed to set interest rates on certain floating rate retail loans and the external benchmark lending rate on floating rate loans to MSMEs.
Why has penalty been imposed on Tamilnad Mercantile Bank?
Heavier penalty has been imposed on Tamilnad Mercantile Bank because it was facing many charges. RBI said its investigation revealed that the bank failed to fix the interest rate of certain floating rate retail loans and floating rate loans to MSMEs at the external benchmark lending rate. Along with this he created several standards in the same loan category. Certain floating rate loans were not priced based on applicable benchmark rates. And finally CRILC reported incorrect external ratings of some borrowers.
What will be the impact on customers?
RBI has said in its order that this action has been taken on the basis of lack of regulatory compliance. and is not intended to affect the validity of any transaction or agreement entered into by the Bank with its customers. Further, the bank has said that the imposition of penalty will not have any adverse effect on any other action initiated by the RBI against the bank.