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RBI Penalizes 26 Banks and Fintechs for Regulatory Breaches; Union Bank and Lendbox Among Latest
News
24 May 2025
2 min read
1515
The Reserve Bank of India (RBI) has imposed monetary penalties on 26 banks and financial entities in May for various regulatory lapses, with Union Bank of India and fintech platform Lendbox among the latest to face action.
Union Bank of India was fined ₹63.6 lakh for failing to comply with norms related to depositor fund transfers and collateral-free agricultural loans. The RBI found that the bank did not transfer eligible funds to the Depositor Education and Awareness Fund (DEAF) within the stipulated timeframe and collected collateral for agricultural loans under ₹1.6 lakh, in violation of directions. These findings stemmed from supervisory inspections for the financial years ending March 2023 and March 2024.
Fintech firm Transactree Technologies Pvt Ltd, operating under the brand name Lendbox, was fined ₹40 lakh for not adhering to the central bank’s 2017 directions on peer-to-peer lending platforms. In both cases, the RBI clarified that the penalties are based on regulatory deficiencies and do not affect the validity of transactions or customer agreements.
The most significant monetary penalty during the month was imposed on the State Bank of India (SBI), which was fined ₹1.72 crore on May 9. The RBI stated that SBI had violated directions on ‘Loans and Advances – Statutory and Other Restrictions’, ‘Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’, and ‘Opening of Current Accounts by Banks – Need for Discipline’. The penalty was imposed under the Banking Regulation Act, 1949, following a Statutory Inspection for Supervisory Evaluation (ISE) conducted as of March 31, 2023.
Other banks penalized include ICICI Bank (₹97.8 lakh) for non-compliance with cyber security, KYC, and debit and credit card guidelines; Bank of Baroda (₹61.4 lakh) for lapses in service standards; Axis Bank and Bank of Maharashtra (₹29.6 lakh each) for non-compliance with internal account operations and KYC norms, respectively; IDBI Bank (₹31.8 lakh) for irregularities in implementing the interest subvention scheme for agricultural loans; and Yes Bank (₹29.60 lakh) for failing to comply with the RBI’s directions on the presentation and disclosure of financial statements.
The RBI reiterated that these penalties are not a judgment on the legality of any customer transactions or agreements entered into by the banks.
This enforcement action underscores the RBI's commitment to ensuring compliance within India's banking and fintech sectors.
Reference : Economic Times
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