The Reserve Bank of India (RBI) has imposed monetary penalties on Ujjivan Small Finance Bank Limited, The Nainital Bank Limited, and Shriram Finance Limited for failing to comply with various regulatory directives. These penalties were levied following statutory inspections and supervisory evaluations conducted by the RBI.
Penalty on Ujjivan Small Finance Bank Limited
By an order dated February 10, 2025, RBI imposed a penalty of ₹6.70 lakh on Ujjivan Small Finance Bank Limited for non-compliance with directions related to ‘Loans and Advances – Statutory and Other Restrictions’.
- The Inspection for Supervisory Evaluation (ISE 2023) conducted by RBI reviewed the bank’s financial position as of March 31, 2023.
- Following findings of non-compliance, the bank was issued a notice to explain why a penalty should not be imposed.
- After considering its response, additional submissions, and a personal hearing, RBI determined that the violation warranted a monetary penalty.
Penalty on The Nainital Bank Limited
On February 12, 2025, RBI imposed a penalty of ₹61.40 lakh on The Nainital Bank Limited for violating regulatory directives on ‘Interest Rate on Advances’ and ‘Customer Service in Banks’.
Key findings from the statutory inspection and supervisory review:
- The bank failed to benchmark certain floating rate loans extended to MSMEs to an external benchmark rate.
- It charged penal fees for non-maintenance of minimum balance in savings accounts at a flat rate instead of a proportionate charge based on the shortfall.
Penalty on Shriram Finance Limited
RBI also imposed a penalty of ₹5.80 lakh on Shriram Finance Limited for non-compliance with various regulations, including:
- ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016’
- ‘Non-Banking Financial Company – Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016’
- ‘Data Format for Furnishing of Credit Information to Credit Information Companies’
Key regulatory violations identified:
- The company failed to conduct periodic risk categorization reviews of customer accounts.
- It did not include a clause in agreements with Direct Sales Agents (DSAs) regarding RBI’s right to inspect books and accounts of service providers.
- It failed to report corporate Relationship Segment information to Credit Information Companies during the financial year 2022-23.
These penalties reflect the RBI’s strict stance on ensuring compliance with banking and financial regulations to maintain the integrity and stability of the financial system.
