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RBI Imposes Penalties on Tamilnad Mercantile Bank and DCB Bank

The Reserve Bank of India (RBI) has imposed penalties on Tamilnad Mercantile Bank Limited amounting to Rs 1.38 crore and on DCB Bank Ltd. with a fine of Rs 63.6 lakh due to non-compliance with regulatory standards. for failing to adhere to regulatory norms.

In the case of DCB Bank, the RBI inspection has revealed that the bank failed to adhere to the required frequency for resetting interest rates in specific MCLR-linked floating rate advances. Furthermore, it also neglected to align the interest rate of certain floating-rate retail loans and floating-rate loans to MSMEs with an external benchmark lending rate.

Regarding Tamilnad Mercantile Bank, the RBI found that the bank:

i) Failed to align the interest rate on specific floating rate loans to MSMEs with an external benchmark lending rate;

ii) used multiple benchmarks within the same loan category, causing confusion.

iii) did not appropriately price certain floating rate loans according to the relevant benchmark rates; and

iv) inaccurately reported the external ratings of certain borrowers to CRILC.

However, it’s important to note that these penalties do not indicate a judgment on the legitimacy of any transactions or agreements between the bank and its customers.