The RBI has imposed monetary penalties on two banks — Indian Bank (₹1.60 crore) and Indian Overseas Bank (₹63.60 lakh) — and a non-banking finance company, Mahindra & Mahindra Financial Services Ltd (₹71.30 lakh), for non-compliance with various regulatory directions.

The monetary penalty on Indian Bank was imposed for failing to benchmark the interest rate on certain floating rate retail loans and loans to certain Micro, Small and Medium Enterprises (MSMEs) to an external benchmark rate. The bank had also obtained collateral security for certain Kisan Credit Card (KCC) loans up to ₹1.6 lakh and certain loans to Micro and Small Enterprises up to ₹10 lakh, in violation of RBI norms, according to a statement issued by the central bank.

Further, the bank failed to transfer eligible amounts to the Depositor Education and Awareness Fund within the prescribed period.

The RBI said a monetary penalty has been imposed on Indian Overseas Bank as it had obtained collateral security for agricultural loans up to ₹1.60 lakh in certain cases and for loans up to ₹10 lakh extended to certain Micro and Small Enterprises (MSEs), in violation of regulatory norms.

In the case of Mahindra & Mahindra Financial Services Ltd , the central bank stated that the penalty was imposed as the company failed to disclose processing fees and other charges in certain loan application forms. It also did not furnish copies of loan agreements or convey loan details in sanction letters to certain borrowers.

Further, the NBFC did not provide a final opportunity to certain borrowers to repay their loans before the sale or auction of vehicles. Additionally, it allotted multiple customer identification codes to certain customers instead of assigning a Unique Customer Identification Code (UCIC) to each individual borrower.

Published on April 25, 2025