Recorded RBI impact
Fine: Rs 39.5 L
Monetary penalty · Fresh imposition
Published by RBI
3 Feb 2023
Case Brief
RBI imposed a monetary penalty of ₹39.50 lakh on North East Small Finance Bank Limited by order dated January 30, 2023. The penalty was imposed under Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949 for non-compliance with RBI directions on prudential norms for income recognition, asset classification and provisioning, and on capital adequacy and market discipline. RBI’s inspection found that the bank failed to classify borrowal accounts as NPAs, creating a significant divergence between reported and assessed NPAs as on March 31, 2020, and also failed to make Pillar 3 disclosures for FY 2019-20 in its annual report and website.
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 a statutory inspection found deficiencies in regulatory compliance. The bank was found to have failed to classify borrowal accounts as NPAs, resulting in significant divergence between reported and assessed NPAs as on March 31, 2020, and also failed to make Pillar 3 disclosures for FY 2019-20 in its annual report and on its website. RBI stated the action was based on non-compliance with its directions on prudential norms and capital adequacy/market discipline requirements.
Operating Impact
North East Small Finance Bank Limited must absorb the financial penalty and address the compliance gaps identified by RBI. The action does not itself restrict operations, but it underscores continued supervisory scrutiny over asset classification and disclosure practices.
Regulatory Basis
- Section 47 A (1) (c) read with Section 46 (4) (i) of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 39.5 L
- Order Date
- 30 Jan 2023
- Effective From
- 30 Jan 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Bank