RBI penalises DCB Bank and Tamilnad Mercantile Bank

The Reserve Bank of India (RBI), the central bank of the country has imposed a monetary penalty of Rs 63.60 lakh on DCB Bank and RS 1.31 crore on Tamilnad Mercantile Bank.

In a statement issued by the RBI, the penalty on DCB Bank is on the back of non-compliance with certain directions issued on ‘Interest Rate on Advances’.

For Tamilnad Mercantile Bank was due to non-compliance with certain directions issued by RBI on ‘Interest Rate on Advances’ and ‘Central Repository of Information on Large Credits (CRILC) – Revision in Reporting’.

The order states that based on supervisory findings of non-compliance with RBI directions / statutory provisions and related correspondence in that regard, a notice was issued to the bank(s) advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the directions.

“After considering the bank’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI found inter alia that the following charges against the bank were sustained warranting imposition of monetary penalty.”

DCB Bank was found to have failed to reset the interest rates at the prescribed periodicity in certain MCLR-linked floating rate advances and it failed to benchmark the interest rate of certain floating-rate retail loans and floating-rate loans to MSMEs to an external benchmark lending rate.

Tamilnad Mercantile Bank was found to have failed to benchmark the interest rate on certain floating rate loans to MSMEs to an external benchmark lending rate; it adopted multiple benchmarks within the same loan category

; failed to price certain floating rate loans with reference to actual benchmark rate applicable to those loans and wrongly reported external rating of certain borrowers to CRILC.