RBI imposes penalties on three financial institutions for regulatory breaches

On March 03, 2025, the Reserve Bank of India (RBI) imposed monetary penalties on three financial entities following statutory inspections and notices for non-compliance with regulatory guidelines.

Vanchinad Finance Pvt. Ltd., Ernakulam, Kerala
Vanchinad Finance was fined ₹1.00 lakh for failing to adhere to RBI directions related to dividend payouts under NBFC regulations. The penalty was imposed after the company declared a dividend exceeding the prescribed payout ratio, as revealed during the review of its interim dividend declaration to its parent company.

Sri Basaveshwar Sahakar Bank Niyamitha, Gulbarga, Karnataka
Sri Basaveshwar Sahakar Bank faced a penalty of ₹2.00 lakh for several compliance failures. The RBI noted breaches in inter-bank exposure limits, excessive donations beyond regulatory thresholds, and delays in uploading customer KYC records to the Central KYC Records Registry. These issues were identified during a supervisory inspection based on the bank’s financial position as of March 31, 2023.

The A.P. Raja Rajeswari Mahila Co-operative Urban Bank Ltd., Hyderabad
The bank was fined ₹50,000 for exceeding the regulatory limit while sanctioning gold loans under a bullet repayment scheme. This breach was also discovered during the RBI’s review of the bank’s compliance with its management of advances guidelines.

In all cases, the RBI clarified that these actions are based on regulatory non-compliance and are not intended to affect the validity of any transactions with customers. The penalties are imposed without prejudice to further actions that the RBI may take if necessary.

These measures underscore the RBI’s commitment to enforcing compliance and maintaining stability within the financial system.