RBI imposes penalty on BOB, IOB and Citibank; Action has been taken on PNB-AXIS, this is the reason
RBI’s campaign against banks, NBFCs and cooperative banks is running at full speed. RBI is taking no delay in taking action against banks that flout the rules. On Friday, it has imposed fine on Bank of Baroda Indian Overseas Bank and Citibank. Along with this, RBI has also abolished the Board of Directors of Abhyudaya Sahakari Bank.
RBI imposed fine on many banks:-
RBI on Friday simultaneously imposed financial penalty on Bank of Baroda, Citibank and Indian Overseas. The board of directors of Abhyudaya Cooperative Bank, a leading cooperative bank in Mumbai, was abolished. In November alone, action has been taken against more than one and a half dozen co-operative banks including PNB, big banks like Bank of Baroda and Federal Bank and big NBFCs like Bajaj Finance.
The situation is that this month four NBFCs and two housing finance related companies have handed over their licenses to RBI, while the licenses of two NBFCs have been cancelled. Apart from this, the new rules made regarding unsecured retail loans also show the changed attitude of RBI.
Why is RBI showing more strictness?
Banking sector experts say that when India is rapidly moving towards becoming a developed country, then a strict environment is necessary to strengthen the fundamentals of the banking and financial sector of the country. RBI is showing more strictness than this intention.
RBI on Friday imposed a total fine of Rs 10.34 crore on Citi Bank, Bank of Baroda and Indian Overseas Bank for violation of rules. The maximum fine of Rs 5 crore has been imposed on Citi Bank for not following the rules related to depositor education, awareness fund scheme and outsourcing of financial services.
Fine of crores of rupees on banks
A fine of Rs 4.34 crore has been imposed on Bank of Baroda for not following the guidelines related to central repository. A fine of Rs 1 crore has been imposed on Indian Overseas Bank for violation of rules related to loans and advances.
Fine imposed on five cooperative banks
Earlier on Thursday, fine was imposed on five cooperative banks of Gujarat. On November 20, a fine was imposed on six co-operative banks simultaneously. Apart from this, many co-operative banks have also been found guilty of not following other rules and action has been taken against them.
During this period, a fine of Rs 90.92 lakh was also imposed on Bajaj Finance and Axis Bank for not following the rules. A day before this, a big NBFC like Bajaj Finance was ordered to shut down its two services Iqam and Insta EMI Card.
More strictness on cooperative banks and NBFCs
More strictness on co-operative banks and NBFCs: RBI data shows that more strictness is being imposed on co-operative banks and NBFCs. Experts say that this means that these two categories of financial institutions are not yet very serious about following the rules of the Central Bank.
After the scam related to Punjab and Maharashtra Co-operative Bank came to light, RBI is continuously implementing the rules regarding co-operative banks in almost the same way as it is for commercial banks. These banks are facing problems in following these rules due to which penalties are being imposed on them or in many cases these co-operative banks or NBFCs themselves are deciding to close their business.
On November 10, RBI directed the closure of two NBFCs. It is clear from this that institutions that do not follow the rules are being thrown out of the system.
