RBI Imposes ₹54.78 Crore in Penalties on 353 Banks and Financial Entities for Regulatory Violations

Image Source : The Economic Times

The Reserve Bank of India (RBI) has taken enforcement action against 353 regulated entities, imposing penalties totaling ₹54.78 crore during the financial year 2024-25. The penalties were levied for non-compliance with statutory provisions and regulatory directions, covering areas such as cybersecurity, exposure norms, fraud classification, and credit information reporting.

Regulatory Violations and Enforcement Actions
- The penalties addressed contraventions related to cybersecurity frameworks in banks, exposure norms, income recognition and asset classification (IRAC) guidelines, Know Your Customer (KYC) directives, fraud classification and reporting, and submission of credit information to credit information companies
- The RBI’s enforcement measures reflect its commitment to maintaining financial stability and ensuring compliance among banks and non-banking financial institutions

Breakdown of Penalties Across Financial Institutions
- Cooperative banks faced the highest number of penalties, with 264 cases amounting to ₹15.63 crore
- Non-banking financial companies (NBFCs) and asset reconstruction companies (ARCs) were penalized in 37 cases, totaling ₹7.29 crore
- Housing finance companies faced 13 penalties, amounting to ₹83 lakh
- Among commercial banks, eight public sector banks were fined ₹11.11 crore, while 15 private sector banks faced penalties totaling ₹14.8 crore
- Six foreign banks were also penalized for non-compliance with RBI regulations

Implications for the Financial Sector
- The enforcement actions highlight the RBI’s increasing scrutiny of financial institutions, particularly in areas related to digital transactions and cybersecurity risks
- The penalties serve as a warning to banks and financial entities to strengthen their compliance frameworks and risk governance mechanisms
- Industry experts anticipate further regulatory tightening as the RBI continues to monitor financial institutions for adherence to statutory guidelines

Future Outlook and Compliance Measures
- Banks and financial institutions are expected to enhance their internal compliance mechanisms to avoid future penalties
- The RBI may introduce additional regulatory measures to address emerging risks in the financial sector
- Strengthening cybersecurity frameworks and fraud detection systems will be a priority for financial entities to align with RBI directives

Sources: Economic Times, Moneycontrol, Financial Express, RBI Annual Report 2024-25