RBI Action: The Reserve Bank of India (RBI) has recently taken severe remedial steps for Indian Bank and Mahindra & Mahindra Financial Services. Both of them have been fined for some deficiencies in regulatory compliance. Indian Bank’s for Rs 1.61 crore for breaching some provisions of the Banking Regulation Act and not observing certain guidelines on interest rate controls regarding KCCs and loans to the MSME triad and also midcaps.

Action on Mahindra & Mahindra Financial

As per another communication issued by the central bank, ‘non-banking financial company – Mahindra & Mahindra Financial Services was fined Rs 71.30 lakh for non-adherence to specific guidelines set forth in the bank. This is with regard to the company which was mired in controversy Titanic A.’ The central bank stated that in both instances the fines, in these cases, were, however, on all counts on the facts of non-compliance with rules and regulations.

Cancellation of Bank License

RBI was in the news recently when it was reported that it has cancelled the license of Jalandhar based Imperial Urban Co-operative Bank. The reason given is that the bank lacked adequate capital and earning potential. He has also requested that the Cooperative Society Registrar for the Government of Punjab issue an order already to close the bank and liquidator to the bank. Few days back, on April 22, the RBI cancelled the license of Aurangabad based Ajanta Urban Cooperative Bank Limited. The reason put forward by the RBI is that the Ajanta Urban Cooperative Bank does not possess adequate capital and earning potential.

And what of the customers of the two banks?

As far as the customers are concerned, the DICGC has offered coverage for Rs 5 Lakh for each bank depositor. Based on these estimates, more than 91.55 percent of depositors of the bank will be able to withdraw their entire deposit amount.

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