Page 11 - Banking Finance December 2023

RBI CORNER

breaking regulations, especially with ports/imports in INR," said the state- update credit records within 30 days of
regard to digital platforms. ment. borrower complaints.
The RBI ordered HDFC Bank, a major India has been attempting to advance
player in the private sector banking the rupee trade in the wake of the Kotak Mahindra and ICICI
industry, to stop developing new digi- West-imposed sanctions and the con- Bank, penalised for signifi-
tal businesses and to stop accepting flict between Russia and Ukraine.
new credit card applications in Decem- cant errors.
ber 2020 after the lender experienced Banks must pay a fine or ICICI Bank and Kotak Mahindra have
several data center outages. In March been penalized by the Reserve Bank of
2022, the central bank removed all of resolve complaints within India (RBI) for flagrant disregard for a
the limitations imposed on HDFC Bank. 30 days. number of its directives.
In March 2022, the RBI prohibited The Reserve Bank of India (RBI) According to a RBI statement, ICICI
Paytm Payments Bank from accepting threatened to fine lenders, financial Bank has been fined Rs. 12.19 crore for
new clients because of possible vulner- institutions, and credit bureaus Rs. 100 marketing and selling nonfinancial
abilities in its technological infrastruc- per day if they did not settle consumer products, approving loans to busi-
ture. complaints within 30 days. nesses where two of its directors also
Additionally, the RBI ordered credit held board positions, and neglecting to
RBI allows banks to open information companies (CICs) and notify the RBI of frauds within the re-
current accounts for ex- credit institutions (CIs) to establish a quired time frame.
compensation plan for credit informa- Kotak Mahindra Bank was fined Rs.
ports. tion that is delayed or inaccurately 3.95 crore by the RBI for neglecting to
In an effort to give exporters more updated. conduct the yearly review, perform
operational flexibility, the Reserve The RBI stated that even though a CI due diligence on the service provider,
Bank of India (RBI) allowed banks to provided the updated credit informa- and make sure that clients aren't con-
open extra current accounts for export tion to the CIC within 21 calendar days tacted before 7 a.m. or after 7 p.m.
proceeds in addition to special rupee of being notified by the complainant or
vostro accounts. to give exporters the CIC, "a CIC shall pay compensation According to the central bank state-
more flexibility in their operations. to the complainant if the CIC has failed ment, Kotak Mahindra Bank also as-
sessed foreclosure charges even
According to the RBI's July 11, 2022 to resolve the complaint within 30 cal- though the loan agreement contained
circular, banks that maintain special endar days of being informed by the no provision requiring the bank to levy
rupee vostro accounts are allowed to complainant or a CI." Within the next
a prepayment penalty on loans it re-
open an additional special current ac- six months, CICs and CIs are expected
called or foreclosed on. Additionally,
count for their exporter constituent to establish procedures and execute
the bank charged interest starting on
solely for the purpose of settling export the compensation plan, per the central
the disbursement due date rather
transactions. bank's directive.
than the actual date of disbursement,
Given the growing interest in Indian Credit information of individuals, cor- which is against the terms and condi-
rupees by the international trading porations, and small businesses is kept tions of sanction. The RBI reported
community, the RBI requested banks to on file by CICs and is available for ac- that ICICI Bank was not complying with
set up extra arrangements for export cess by banks and other lenders. They its directives regarding "Frauds classi-
and import transactions in July 2022. gather data from a range of credit fication and reporting by commercial
"In order to promote growth of global providers, such as non-bank financial banks and select Fls" and "Loans and
trade with emphasis on exports from institutions, credit card companies, Advances - Statutory and other restric-
India and to support the increasing in- and banks. tions" regarding "Financial Services
terest of global trading community in All four of the CICs were hit with a provided by the banks." These viola-
INR, it has been decided to put in place combined penalty of Rs. 1.01 crore by tions were noted in relation to specific
an additional arrangement for invoic- the RBI in June for providing false or sections of the Banking Regulation Act,
ing, payment, and settlement of ex- incomplete information and failing to 1949 (the BR Act).

10 | 2023 | DECEMBER | BANKING FINANCE