Page 9 - BANKING FINANCE NOVEMBER 2023

RBI CORNER

Reserve Bank

News

RBI imposes fine on two communication, enforcement, legal, faulter for defaulting on repayments
and risk management in the central despite having the capacity to make
state-owned banks bank. them. This would also include those

The Reserve Bank said it has imposed Rao was earlier executive director in- who have diverted or siphoned off bor-
penalties on three state-owned banks, charge of statistics and information rowed funds. That apart, those who fail
including SBI and Indian Bank, for vio- management, the financial markets to infuse equity despite agreeing to do
lation of various regulatory norms. so, and having the wherewithal to do
operation department, and the inter-
A penalty of Rs 1.3 crore has been im- national department. He had joined so, would also come under this defini-
posed on the State Bank of India for RBI in 1984 and had worked as the tion. It would include outstanding loans
noncompliance with certain directions banking ombudsman in New Delhi and of Rs. 25 lakh or more.
issued by the RBI on 'Loans and Ad- in RBI's regional offices.
vances - Statutory and Other Restric- RBI may allow borrower-
tions' and 'Guidelines on Management Lenders to tag wilful de- bank deal to shed tag of
of Intra-Group Transactions and Expo-
sures', it said in a statement. fault in six months under wilful defaulter
new rules An RBI circular that requires lenders to
In another release, the RBI said a pen-
alty of Rs 1.62 crore has been imposed RBI has issued draft guidelines on clas- take a quick call on classifying wilful
on Indian Bank for contravention of sification of wilful defaulters, expand- defaulters will also allow borrowers to
certain directions on 'Loans and Ad- ing the definition of the term and man- shake off the tag by entering into a
vances - Statutory and Other Restric- dating lenders to complete the process compromise settlement with banks.
tions', KYC, and 'Reserve Bank of India of identifying and tagging borrowers as In June 2023, the central bank, in its
(Interest Rate on Deposits) Directions, wilful defaulters within six months of circular on compromise settlements,
2016'. loans turning bad. had allowed one-time settlement of
Apart from various judgements by high wilful defaults only if a higher author-
RBI Deputy Governor Rao courts and the Supreme Court, the ity approved it. The norms had caused
regulator said it has received sugges- controversy with bank unions and the
gets 1-year extension tions from banks and other stakehold- Congress attacking the government
M Rajeshwar Rao has been re-ap- ers on the matter. The new draft pro- over the new rules.
pointed as RBI's deputy governor for visions would apply to banks, non-bank- Recently, RBI came out with a draft
one year with effect from October 9. ing financial companies (NBFCs) and master direction on the treatment of
Rao (62) was appointed as deputy gov- all-India financial institutions like the wilful defaulters. According to RBI, the
Exim Bank and the Nabard.
ernor of RBI in October 2020 for three objective is to provide for a non-dis-
years. He is in charge of regulation, A borrower can be labelled a wilful de- criminatory and transparent proce-

8 | 2023 | NOVEMBER | BANKING FINANCE