RBI Imposes Penalties Of Rs 1 Crore On LVB and Rs 75 Lakh On Syndicate Bank For Not Complying With Regulations

The Reserve Bank of India (RBI) has imposed penalties of Rs 1 crore on Lakshmi Vilas Bank (LVB) and Rs 75 lakh on Syndicate Bank respectively.

The RBI stated that it has penalized LVB for non-compliance with certain provisions of directions issued by it on Income Recognition and Asset Classification (IRAC) norms.

In the case of Syndicate Bank, the apex bank has stated that it has been penalized for not complying with the RBI’s directions on frauds classification and reporting as well as innovative housing loan products, which is upfront disbursal of housing loans.

The RBI stated that LVB’s statutory inspection with reference to its financial position as on March 31, 2017, revealed non-compliance with directions issued by it on IRAC norms.

Incidentally, the RBI had placed LVB under prompt correction action framework earlier, citing its high net non-performing assets, insufficient capital to risk-weighted assets ratio as well as common equity Tier-I capital, besides negative return on assets for two consecutive years.

The RBI stated that the return on fraud statement filed by Syndicate Bank with the apex bank revealed that the bank had failed to comply with certain provisions in directions issued by it related to fraud reporting as well as disbursal of housing loans.

However, the RBI also stated that in the case of both the banks, action has been taken based purely on the deficiencies in regulatory compliance, and is not intended to pronounce the validity of any transaction or agreement entered into by the bank with its customers.