CHENNAI: The Reserve Bank of India (RBI) has imposed a monetary penalty on TamilNad Mercantile Bank (TMB) and Mumbai-based DCB Bank for non-compliance with certain directions issued by the regulator.
RBI said Rs 1.31 crore penalty was imposed on TMB for non-compliance on ‘Interest Rate on Advances’ and ‘Central Repository of Information on Large Credits (CRILC) - Revision in Reporting’, it said on Tuesday.
The central bank said the bank failed to benchmark the interest rate on certain floating rate loans to MSMEs to an external benchmark lending rate and adopted multiple benchmarks within the same loan category. The banking regulator has also flagged the failure of TMB to price certain floating rate loans with reference to actual benchmark rate applicable to those loans and wrongly reported external rating of certain borrowers to CRILC.
The action is based on deficiencies in regulatory compliance after a statutory Inspection conducted by RBI. Based on supervisory findings a show cause notice was issued to the bank. After considering the bank’s reply, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI found charges against the bank were sustained warranting imposition of penalty.
Similarly, DCB Bank was imposed a penalty of Rs 63 lakh for non-compliance with directions on ‘Interest Rate on Advances’. These penalties have been imposed under the provisions of section 47 A of the Banking Regulation Act.