The Reserve Bank of India (RBI) has once again taken strict action against violation of rules. A fine of Rs 41.80 lakh has been imposed on Bank. This action has been taken under the provisions of the Banking Regulation Act 1949. It is accused of not properly following the KYC guidelines issued by RBI.

RBI had conducted an inspection to check the financial position of Bank till 31 March 2025. During this period, violation of rules was detected. After which a show cause notice has been issued to the bank. The decision to impose fine has been taken on the basis of the reply received and the presentations given during the personal hearing.

The bank violated these rules

The Bank did not review the risk classification of certain categories of accounts in a timely manner. Apart from this, loans to directors were also approved. However, this will not affect any transaction or agreement taking place between customers and banks. Nor will it have any adverse effect on any future action. This has been confirmed by RBI itself.

PR14047D6B088465C4B41A57264498EBFCDB2

Muthoot Housing Finance broke these rules

RBI has imposed a fine of Rs 80 thousand on Muthoot Housing Finance Company Limited. It is accused of violating the guidelines issued on “Fair Practice Code”. This step has been taken by the Central Bank under Section 52A of the National Housing Bank Act 1987.

During an inspection, RBI found that the company failed to ensure compliance with certain regulations. After this, a notice was issued and reasons were also asked. The decision to impose penalty was taken in view of the reply received on the information and the presentations made during the personal hearing.

The company failed to disclose in the application forms and sanction letters its approach to risk gradation and the rationale for charging different interest rates to different categories of borrowers. However, this action will not affect customers.

PR1390D5AA213EE6442A6B2BAE6E703973F35