RBI asks these banks to comply with the guidelines, otherwise, they will face action. The penalties mention RBI’s resolve to ensure that financial discipline is maintained by banks and NBFCs.
Equitas Small Finance Bank fined for violating regulations
In a statement released on January 20, 2025, RBI said, it slapped a penalty of ₹65 lakh on Equitas Small Finance Bank for non-compliance with:
- February 1992Rules on Fees for Foreclosure and Prepayment Penalties on Floating Rate Loans
- Revised Guidelines on Release of Collateral/Third Party Guarantee for the Loans Extended under Agricultural Loans
Key violations included:
- Providing Floating Rate Term Loan to Individuals for non-business purpose and levying foreclosure charges.
- Making collateral mandatory for some agri-loans up to ₹1.6 lakh, as against RBI’s guidance on unsecured farm loans.
The penalty has been imposed under Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949. The violations were detected as part of the RBI’s supervisory inspection on the basis of the bank’s financial position as on March 31, 2023.
India Post Payments Bank
RBI had imposed a ₹26.70 lakh settlement amount on India Post Payments Bank for breaches of certain customer service regulations on January 15, 2025.
This was based on findings of RBI’s statutory inspection of the bank, which showed that the bank:
- Upgraded some Savings Bank account holders without proper customer consent.
- Charged annual fees after upgrading accounts without consent
The penalty was issued in accordance with the provisions of Sections 47A(1)(c) and 46(4)(i) of the Banking Regulation Act, 1949. Despite the bank’s explanation, RBI determined that the violations were serious enough to warrant regulatory action.
Aptus Finance India Get Penalized.
RBI had on January 20, 2025, imposed a penalty of ₹3.10 lakh on Aptus Finance India for violation of governance-related provisions of the ‘NBFC – Systemically Important Non-Deposit Taking and Deposit-Taking Company (Reserve Bank) Directions, 2016’
The one main issue they recognized was:
- Not seeking RBI’s prior approval for a management change that resulted in the replacement of more than 30% of the directors of the company, excluding independent directors.
- The fine is in pursuance of the provisions of Section 58G(1)(b) read with Section 58B(5)(aa) of the RBI Act, 1934.
Why Compliance with Regulations is Important
The fines reflect RBI’s tough enforcement of banking norms to safeguard transparency and consumer protection. However, such measures punish non-compliance but do not invalidate transactions or agreements customers have with such firms.
Conclusion
RBI’s on Equitas Small Finance Bank, India Post Payments Bank, and Aptus Finance India show the indispensable nature of compliance with regulatory standards. RBI is strict about ensuring that banks and NBFCs must operate as per its guidelines to discourage any penalty by it and to retain the customer faith.
Compliance is more than just avoiding penalties for financial institutions — it’s about establishing credibility and maintaining long-lasting sustainability in India’s ever-evolving banking landscape.
