RBI slaps penalty on Equitas
Mumbai: The Reserve Bank of India has imposed a penalty of Rs 10 lakh on Equitas Small Finance Bank (SFB) as the company was selling mutual fund, pension and insurance products without taking the approval of the regulator.
In a statement issued on Thursday, the RBI said that on March 1 it had imposed a "monetary penalty of Rs 1 million on Equitas Small Finance Bank Limited for non-compliance with one of the licensing conditions stipulated by the RBI".
"This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers," the RBI said.
The banking regulator went on to add that Equitas had undertaken the activities of rolling out mutual fund units, pension products, insurance products and portfolio management services without obtaining its prior approval.
Based on the information received and other relevant documents, a notice, dated January 18, 2018, was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the licensing conditions stipulated by the Reserve Bank of India at the time of issuing the licence to the bank, it said further.
After considering the bank's reply and oral submissions during the personal hearing, the RBI came to the conclusion that the charge was substantiated and warranted the imposition of penalty.
Equitas Small Finance Bank (ESFBL) had started its banking operations from Chennai in September 2016.
The RBI had issued licences to 10 entities in September 2015 to provide basic banking services such as accepting deposits and lending to unserved and underserved, including small business units, small and marginal farmers, micro and small industries and unorganised sector entities.