Recorded RBI impact
Fine: Rs 1.00 Cr
Monetary penalty · Fresh imposition
Published by RBI
9 May 2025
Case Brief
By an order dated May 07, 2025, RBI imposed a monetary penalty of ₹1.00 crore on Jana Small Finance Bank Limited. The penalty was levied under Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949 for contravention of Section 12B(5). RBI found that the bank issued/allotted CCPS to certain persons in a manner that, together with their equity holdings, caused them to exceed the permitted percentage of the bank’s paid-up share capital, without obtaining the required prior RBI approval under Section 12B(1). RBI noted the action is based on statutory compliance deficiencies and is without prejudice to any other action that may be initiated.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949 after finding a sustained charge that Jana Small Finance Bank Limited had issued/allotted Compulsory Convertible Preference Shares (CCPS) to certain persons. Along with the equity share capital already held by them, this resulted in those persons holding more than the permitted percentage of the bank’s paid-up share capital. RBI found that the required previous approval of RBI under Section 12B(1) was not obtained, amounting to contravention of Section 12B(5).
Operating Impact
The bank must absorb the ₹1 crore penalty and address the underlying statutory-compliance weakness in share capital / ownership approval processes. The order does not itself change customer transactions, but it signals heightened regulatory scrutiny over future capital issuances and shareholder approvals.
Regulatory Basis
- Section 12B(5) of the Banking Regulation Act, 1949
- Section 47A(1)(c) read with Section 46(4)(i) of the BR Act
- Section 12B(1) of the BR Act
Action Facts
- Primary Impact
- Fine: Rs 1.00 Cr
- Order Date
- 7 May 2025
- Effective From
- 7 May 2025
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Bank