The Reserve Bank of India (RBI) has made a significant move by imposing a monetary penalty of ₹64 Lakh (Rupees Sixty Four Lakh only) on RBL Bank Limited. This action was taken due to the bank’s non-compliance with certain directives of the Reserve Bank of India, specifically related to prior approval for the acquisition of shares or voting rights in private sector banks, as per the “Reserve Bank of India (Prior approval for acquisition of shares or voting rights in private sector banks) Directions, 2015.” The RBI exercised its powers under the provisions of Section 47 A (1) (c) read with Sections 46 (4) (i) of the Banking Regulation Act, 1949, to impose this penalty.
It’s crucial to clarify that this penalty is a result of deficiencies in regulatory compliance and does not pass judgment on the bank’s transactions or agreements with its customers.
Background
The RBI conducted a Statutory Inspection for Supervisory Evaluation (ISE 2020) of RBL Bank with reference to its financial position as of March 31, 2020. During this inspection, the Risk Assessment Report and Inspection Report pertaining to ISE 2020 were reviewed, along with all related correspondence. This examination revealed non-compliance with the aforementioned directives, as the bank failed to (i) obtain an annual declaration in Form B from one of its major shareholders within one month of the close of the financial years ending on March 31, 2018, March 31, 2019, and March 31, 2020, and (ii) provide certificates to RBI regarding the ‘fit and proper’ status of one of its major shareholders by the end of September of these financial years. Subsequently, a notice was issued to the bank, requesting an explanation as to why a penalty should not be imposed for this failure to comply with the directive.
Following a comprehensive review of the bank’s response to the notice and oral submissions made during the personal hearing, the RBI concluded that the charge of non-compliance with the RBI directions was substantiated, justifying the imposition of a monetary penalty on the bank.
In Shorts
RBL Bank Limited has been penalized by the Reserve Bank of India with a ₹64 Lakh penalty for its non-compliance with specific RBI directives regarding the acquisition of shares or voting rights in private sector banks, as outlined in the “Reserve Bank of India (Prior approval for acquisition of shares or voting rights in private sector banks) Directions, 2015.”
