RBI imposes fines on Tamilnad Mercantile Bank and DCB Bank for violating regulations
The Reserve Bank of India (RBI) has imposed penalties on Tamilnad Mercantile Bank Limited and DCB Bank Ltd. for not complying with regulatory norms. DCB Bank was fined for not resetting interest rates as required, while Tamilnad Mercantile Bank was penalized for failing to benchmark interest rates properly. The RBI clarified that the penalties were for regulatory compliance issues and not an assessment of bank-customer agreements.
In a recent development, the RBI has imposed a penalty of Rs 1.38 crore on Tamilnad Mercantile Bank Limited and a fine of Rs 63.6 lakh on DCB Bank Ltd. for not adhering to regulatory norms. The inspection revealed that DCB Bank did not reset interest rates as required for certain advances, and failed to benchmark interest rates for some retail and MSME loans. Similarly, Tamilnad Mercantile Bank was found to have not benchmarked interest rates properly, used multiple benchmarks in the same loan category, and provided inaccurate external ratings for certain borrowers.
The RBI clarified that these actions were taken due to deficiencies in regulatory compliance, and were not a judgment on the validity of any transactions or agreements made by the banks with their customers. The penalties serve as a reminder for banks to ensure they are following regulatory guidelines to maintain transparency and fairness in their operations. The RBI continues to monitor and enforce compliance standards to uphold the stability and integrity of the banking sector.