RBI Slaps ₹41.8 Lakh Penalty on Bandhan Bank, ₹80,000 on Muthoot Housing Finance for Non-Compliance

The Reserve Bank of India (RBI) has taken disciplinary action against Bandhan Bank and Muthoot Housing Finance Company for not adhering to designated regulations, resulting in monetary penalties on both entities. 

Details of the Penalties Imposed 

The Reserve Bank of India has levied a penalty of ₹41.8 lakh on Bandhan Bank due to its failure to perform periodic reviews of risk categorisation for certain accounts and improperly sanctioning director-related loans.  

Moreover, Muthoot Housing Finance Company faced a fine of ₹80,000 for non-compliance with the 'Fair Practice Code'. 

Reasons for the Penalties 

The action against Bandhan Bank stemmed from non-compliance with the Know Your Customer (KYC) norms, which are integral to ensuring the identity verification of account holders. 

Bandhan Bank was also found violating other regulatory instructions, like granting director-related loans without sufficient checks. 

Impact on Regulatory Compliance 

Muthoot Housing Finance Company faced a penalty due to irregularities relating to the Fair Practice Code. This stipulates ethical practices in operations, aiming to enhance transparency and fairness in customer dealings.  

RBI's actions highlight the emphasis on compliance with statutory and regulatory requirements. 

Read More: RBI Proposes New Rules for Digital Wallets, Tightens PPI Framework to Boost Security and User Protection! 

Conclusion 

RBI's recent penalties on Bandhan Bank and Muthoot Housing Finance underscore the critical importance of adhering to regulatory standards. These actions serve to reinforce the banking sector's commitment to statutory norms and ethical practices. 

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