The Reserve Bank of India ( RBI ) has levied a monetary penalty of ₹63,60,000/- on DCB Bank Ltd. for its failure to comply with certain directives regarding ‘Interest Rate on Advances’.
The RBI found that DCB Bank had failed to reset interest rates at the prescribed intervals in certain MCLR ( Marginal Cost of Funds based Lending Rate ) linked floating rate advances.
Additionally, the bank neglected to benchmark the interest rates of certain floating-rate retail loans and loans to Micro, Small, and Medium Enterprises ( MSMEs ) to an external benchmark lending rate.
The scrutiny leading to this penalty arised from the Statutory Inspection for Supervisory Evaluation ( ISE 2022 ), conducted by the RBI, assessing the financial status of DCB Bank as of March 31, 2022.
Following supervisory observations of non-compliance with RBI directives and statutory provisions, the bank was served with a notice prompting it to justify why a penalty should not be imposed for its failure to adhere to the prescribed guidelines.
After reviewing the bank’s response to the notice, conducting a personal hearing, and examining additional submissions, the RBI concluded that certain charges against the bank warranted the imposition of a monetary penalty.
The RBI added that “The action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transactions or agreement entered into by the bank with its customers. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.”
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