The Reserve Bank of India (RBI) has taken strict action against India Post Payments Bank (IPPB) and Equitas Small Finance Bank for regulatory violations. Additionally, a monetary penalty has been imposed on a Non-Banking Financial Company (NBFC), Aptus Finance India Private Limited. Let’s explore the reasons behind this move and its potential impact on customers.
RBI’s Regulatory Oversight
As the central regulatory authority, the RBI ensures compliance across all banking and non-banking financial institutions. It frequently takes corrective measures to maintain financial discipline. Recently, it imposed penalties on the following institutions:
- India Post Payments Bank (IPPB): Fined Rs 26.70 lakh.
- Equitas Small Finance Bank: Fined Rs 65 lakh for non-compliance with guidelines.
- Aptus Finance India Private Limited: Fined Rs 3.10 lakh.
Violation of RBI Guidelines
Aptus Finance India Private Limited failed to obtain prior written permission from RBI before making management changes. As a result, 30% of its directors were changed, excluding independent directors. Discrepancies in compliance with RBI’s directives regarding the appointment of directors led to a show cause notice. Following an investigation, the fine was imposed.
Reasons Behind RBI’s Action Against Banks
- India Post Payments Bank (IPPB): The bank upgraded certain savings accounts without obtaining customer consent. Annual charges were also levied post-upgradation. Upon confirmation of these allegations, RBI imposed a fine.
- Equitas Small Finance Bank: The bank imposed foreclosure charges on some floating rate term loans taken by individual borrowers for non-business purposes. Additionally, collateral security was obtained for loans up to Rs 1.6 lakh, violating RBI’s regulations.
Impact on Customers
The penalties imposed are a result of compliance deficiencies, but they do not impact existing customer transactions or agreements. The RBI’s actions serve as a reminder to financial institutions to adhere strictly to regulatory norms and ensure fair banking practices.
