RBI imposed penalty on Tamilnad Mercantile Bank for imposing Charges on BSBDA Accounts
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹39.60 lakh (Rupees Thirty Nine Lakh Sixty Thousand only) on Tamilnad Mercantile Bank Limited for contravention of provisions of section 10A of Payment and Settlement Systems Act, 2007 (PSS Act) and section 26A of the Banking Regulation Act, 1949 (BR Act).
The Statutory Inspection for Supervisory Evaluation (ISE 2024) of the bank was conducted by RBI with reference to its financial position as on March 31, 2024. Based on the supervisory findings of contravention of the provisions of PSS Act and BR Act and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for contravention of the provisions of the said Acts.
Why Penalty was imposed?
The penalty was imposed because:
- The bank had indirectly imposed charges on Basic Savings Bank Deposit (BSBD) account holders for making payment using Unified Payments Interface (UPI); and
- The bank had not transferred eligible amounts to the Depositor Education and Awareness Fund within the prescribed period.
The action is based on deficiencies in statutory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
