Page 7 - Banking Finance November 2019

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RBI governor questioned Income & loan limits for NBFC-MFI increased by RBI
on financial frauds Under statement on Developmental and Regulatory Policies, the RBI had an-
nounced, “Non-Banking Financial Company – Micro
RBI Governor Shaktikanta Das has re-
cently been ques- Finance Institution (NBFC-MFI) in the wake of the
tioned by the two Andhra Pradesh micro finance crisis in 2010, a Sub-
external directors Committee of the Central Board of the Reserve Bank
for unnoticing a was constituted to study issues and concerns in the MFI
series of scams sector.”
that came to light It was decided, based on the recommendations of the Committee, to create a
since 2018. separate category of NBFC, viz., Non-Banking Financial Company-Micro Finance
Shaktikanta Das was questioned on the Institution (NBFC-MFI) and a detailed regulatory framework for NBFC-MFIs was
Punjab National Bank (PNB) fraud, the put in place in December 2011. The income and loan limits to classify an expo-
IL&FS scam and the very recent Punjab sure as eligible asset were last revised in 2015.
& Maharashtra Co-operative (PMC)
Bank case. RBI imposes Rs 3 crore penalty on SBM Bank
A source said, "These incidents dif- A penalty of Rs 3 crore has been imposed on SBM Bank (India) by the RBI for
fer from each other and are not ex- non-compliance of regulatory norms by SBM Bank
actly related, but a few members (Mauritius), which amalgamated with the former
were quite vocal about it. The gov- in November 2018.
ernor explained the information- The RBI said in a statement that the penalty has
sharing system and collection of data
by the RBI. In some cases, the data been imposed for non-compliance by SBM Bank
itself - even the audited numbers - (Mauritius) with certain provisions of directions is-
were either inadequate or fudged." sued by the central bank on 'Time-bound implementation and strengthening of
SWIFT - related operational controls' and 'Cyber Security Framework in Banks'.
The source added, "Perhaps, it
wasn't an entirely fair question, but The central bank further said that it conducted a scrutiny in order to examine
it was apparent that the RBI officials the implementation of SWIFT related operational controls in SBM Bank
felt awkward. Maybe it was not ex- (Mauritius) at its Indian operations, and it was observed that it failed to comply
pected." The external directors with certain provisions.
mentioned that the issue comes at Based on the findings of the scrutiny and taking into account that Indian under-
a time when the RBI is facing a lot taking of the bank was amalgamated with SBM Bank (India), a notice was is-
of flak over its inspection and over- sued to SBM Bank (India) advising it to show cause as to why penalty should not
sight mechanism efficiency. be imposed for non-compliance with the directions.

BANKING FINANCE | NOVEMBER | 2019 | 7