Reserve Bank of India imposes monetary penalty on The Nainital Bank Limited
Case Brief
The Reserve Bank of India imposed a monetary penalty on The Nainital Bank Limited by order dated May 06, 2019. The bank had been directed, following statutory inspection, to fully automate its NPA identification process within a specific timeframe, and the direction was later reiterated with an extended timeline. RBI took action after the bank failed to comply with the direction, invoking Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949.
RBI imposed a monetary penalty under Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949, because The Nainital Bank Limited did not adhere to RBI's direction to fully automate its NPA identification process within the stipulated timeframe. The direction had been issued after statutory inspection and later reiterated in the inspection report with an extended timeframe, but the bank still failed to comply.
Severity Assessment
A ₹10 million penalty falls in severity band 3; this is a monetary penalty without a broader operational restriction.
The bank must absorb the penalty and address the regulatory deficiency that led to the action. There is no stated restriction on ongoing operations, but RBI's finding signals continuing supervisory concern over the bank's NPA identification controls.
Published as The Nainital Bank Limited
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