RBI imposes Rs 2.27-cr penalty on RBL Bank for non-compliance with rules on recovery agents

The Reserve Bank of India (RBI) said on Monday it fined RBL Bank Ltd Rs 2.27 crore for not complying with certain directives on loan recovery agents.

The RBI noticed "deficiencies in regulatory compliance" after it examined complaints received against the Mumbai-based lender's recovery agents during the financial years 2018-19 to 2021-22, the central bank said in a statement.

RBI said RBL failed to ensure that the loan recovery agents it engaged during those periods did not resort to intimidation or harassment and that it did not ensure police verification of the agents before employing them.

In a statement, the Reserve Bank of India (RBI) said the penalty has been imposed for non-compliance with certain provisions of the directions issued by it on ‘Internal Ombudsman Scheme, 2018’, ‘Fair Practices Code for Lenders’, ‘Credit Card Operations of Banks’, ‘Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’ and ‘Recovery Agents engaged by Banks’.

Meanwhile, the central bank has also imposed penalties on several cooperative banks for contravention of its different norms. The cooperative banks on which penalties have been imposed include Lokmangal Co-operative Bank, Solapur; Jila Sahakari Kendriya Bank Maryadit, Raisen; Smriti Nagrik Sahakari Bank Maryadit, Mandsaur; Raigad Sahakari Bank, Mumbai; Noble Co-operative Bank, Noida; and Imperial Urban Co-operative Bank, Jalandhar.

Last year, the RBI issued a circular advising the financial institutions it regulated to “strictly ensure that they or their agents did not resort to intimidation or harassment of any kind”, and that any violation would be “viewed seriously”.

“This action is based on the deficiencies in regulatory compliance observed relating to the period FY 2018-19 to FY 2021-22 and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers,” said RBI in a statement.

RBL Bank

RBL Bank, formerly known as Ratnakar Bank, is an Indian private sector bank headquartered in Mumbai and founded in 1943. It offers services across six verticals: corporate and institutional banking, commercial banking, branch and business banking, retail assets, development banking and financial inclusion, treasury and financial market operations.