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Informist, Friday, Feb. 14, 2025

--RBI fines Ujjivan Small Fin Bk INR 670,000 for non-compliance with norms

--RBI imposes monetary penalty of INR 580,000 on Shriram Finance

MUMBAI – The Reserve Bank of India Friday said it had imposed a penalty of INR 670,000 on Ujjivan Small Finance Bank for not issuing loan agreements to certain borrowers at the time of sanction or disbursement of loans. The penalty, ordered Monday, is with reference to the bank's financial position at the end of 2022-23 (Apr-Mar).

The central bank also said that it had fined Shriram Finance INR 580,000 for not complying with several of its directions. These breaches include failure to have a system for the conduct of periodic review of risk categorisation of accounts, failure to share information about the relationship segment of the corporates to credit information companies in FY23, and not including a clause in its agreements with certain direct sales agents regarding RBI's right to inspect books and accounts of service providers. Like Ujjivan Small Finance Bank, the penalty imposed on Shriram Finance was also with reference to its position at the end of FY23.

The regulator also said that it had imposed a fine of INR 6.14 million on The Nainital Bank Ltd. for not linking certain floating rate loans given to micro, small, and medium enterprises to an external benchmark and for levying penal charges at flat rates on non-maintenance of minimum balance in savings accounts. These penal charges are supposed to be proportional to the extent of shortfall. The penalty on the lender, a subsidiary of Bank of Baroda, is again related to its financial position at the end of FY23.

Shares of Ujjivan Small Finance Bank closed 1.6% lower at INR 33.41 on the National Stock Exchange, while those of Shriram Finance ended at INR 539.15, down 1.7%.  End

Reported by Christina Titus 

Edited by Nishant Maher

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