The Reserve Bank of India (RBI) has imposed a penalty of Rs 59.20 lakh on South Indian Bank for failing to comply with certain directives regarding ‘interest rate on deposits’ and ‘customer service in banks.’ The penalty was imposed on November 8, following an inspection of the bank’s financial position as of March 31, 2023.
This action by the RBI comes just two months after it fined HDFC Bank, India’s largest bank, Rs 1 crore in September for non-compliance with similar directives related to ‘interest rates on deposits,’ ‘recovery agents engaged by banks,’ and ‘customer service in banks.’
South Indian Bank, a prominent private-sector bank headquartered in Thrissur, Kerala, has a market capitalization of Rs 6,287 crore as of November 8. The RBI’s penalty followed its supervisory evaluation, which revealed non-compliance with certain regulations.
Also Read- RBI Quietly Brings Home 102 Tonnes of Gold This Dhanteras – Here’s the Reason Behind It
The RBI found that South Indian Bank imposed penal charges for non-maintenance of minimum balances without properly notifying customers via SMS, email, or letter. Additionally, the bank had placed liens on certain NRE savings deposit accounts.
The RBI clarified that the penalty is a result of regulatory non-compliance and does not address the validity of any transactions or agreements made by the bank with its customers. The central bank also mentioned that this penalty does not preclude any further actions that may be taken against the bank.