On Tuesday, shares of state-run Syndicate Bank and private lender Lakshmi Vilas Bank fell to their 52-week lows following the Reserve Bank of India (RBI) imposed penalties on them for violation of asset classification and fraud detection rules.
In a BSE filing on Monday, Lakshmi Vilas Bank said that RBI has imposed a fine of Rs 1 crore on it. The statement said, "this is to inform that RBI vide its letter dated 14th October 2019 has imposed a penalty of Rs.1 crore on Lakshmi Vilas Bank for non-adherence to guidelines on IRAC norms and divergence in respect of two NPA accounts aggregating to Rs. 169.50 crores for the year ended 31/03/2017."
Shares of Lakshmi Vilas Bank hit lower circuit on Tuesday trading 4.96 percent lower at Rs 22.05 on NSE.
Syndicate bank in its stock exchange filing on Monday said, "This is to inform that Reserve Bank of India (RBI) in exercise of the powers conferred under Section 47(A)(1)(C) read with Section 46(4)(i) of the Banking Regulations Act, 1949 have imposed an aggregate penalty of Rs 75 1akh on the Bank on account of delay in reporting the fraud to RBI and upfront disbursal of housing loans in cases of incomplete/ under-construction/green field housing projects."
Shares of Syndicate Bank were trading lower than its previous close touching a 52-week low of Rs 23 on Tuesday.
More trouble for LVB
Penalty on LVB comes at a time when it is facing several regulatory restrictions. In September, RBI placed the private lender under the prompt corrective action (PCA)on account of high level of non-performing assets (NPAs), inadequate capital and negative return on assets (RoA). Further, last week, RBI rejected the proposal to merge LVB with Indiabulls Housing Finance Ltd.