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Why RBI Imposed Fine Of Rs 2 Crore on RBL Bank?

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The Reserve Bank of India fined RBL Bank 2.48 percent Rs 2 crore on Monday for violating deposit and board composition rules. The private lender was found to be non-compliant in opening five savings deposit accounts for a cooperative bank after an investigation by the RBI.

 
Why RBI Imposed Fine Of Rs 2 Crore on RBL Bank?

The RBI added, "This action is based on regulatory compliance inadequacies and is not meant to pronounce on the validity of any transaction or arrangement entered into by the bank with its clients."

"After considering the bank's reply to the show-cause notice, oral submissions made during the personal hearing, and examination of additional submissions made by the bank, RBI came to the conclusion that contravention warranted imposition of monetary penalty on the bank," the regulator said.

Vishwavir Ahuja, the managing director, and chief executive of RBL Bank, was recently reappointed for a fourth term, beginning in June, by an overwhelming 99.94 percent of RBL Bank shareholders. Ahuja joined the bank in 2010 from Bank of America, and he was a driving force behind the lender's successful IPO in August 2016 and the doubling of its balance sheet.

The RBI conducted a Statutory Inspection for Supervisory Evaluation (ISE) of the bank based on its financial situation as of March 31, 2019. (ISE 2019). The examination of the Risk Assessment Report and Inspection Report pertaining to ISE 2019, as well as the RBI letter dated October 27, 2020, and related correspondence in the matter, revealed, among other things, regulatory violations and non-compliance with the Act's provisions.

I Failure to comply with the provisions of section 10A(2)(b) of the Act relating to the composition of the Board of Directors by opening five savings deposit accounts in the name of a co-operative bank; and
(ii) Failure to comply with the provisions of section 10A(2)(b) of the Act relating to the composition of the Board of Directors by opening five savings deposit accounts in the name of a co-operative bank. A notice was sent to the bank in this regard, urging it to show cause why a penalty should not be imposed for violating or failing to comply with the provisions of the directions/Act, as indicated therein.
Company details

 

Over the last five years, RBL Bank Ltd.'s loan book growth rate has been steadily falling. The stock returned -64.49 percent over three years, compared to 70.22 percent for the Nifty Midcap 100. Over a three-year period, the stock returned -64.49 percent, while the Nifty Bank delivered investors a 51.27 percent return.

Read more about: rbi rbl bank
Story first published: Monday, September 27, 2021, 19:50 [IST]
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