Join Us for an Exclusive Webinar on the RBI Penalty Report 2024!
AK & Partners invites you to a high-impact webinar analysing the RBI Penalty Report 2024—a must-attend session for senior leaders in the Banking, Financial Services, and Insurance (BFSI) sector
What to Expect:
- Key insights from the latest RBI penalty trends
- Strategic implications for CXOs, compliance heads, and legal professionals
- Practical takeaways to strengthen regulatory compliance
Date: 11 April 2025
Time: 3:00 PM to 3:30 PM
Venue: Online (Webinar link will be shared upon registration)
Stay ahead in regulatory compliance. Reserve your spot now!
1. Regulatory Updates
1.1. India
Reserve Bank of India (RBI)
1.1.1. RBI notified new Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025
On March 24, 2025, the Reserve Bank of India ("RBI") issued Master Directions – RBI (Priority Sector Lending – Targets and Classification) Directions, 2025. The Directions will be applicable on all Commercial Banks including Regional Rural Banks, Small Finance Banks, Local Area Banks and Primary (Urban) Co-operative Banks other than Salary Earners' Banks. These directions shall come into effect on April 1, 2025, and will have higher loan higher loan limits for housing and other loans, expanding eligible purposes for PSL classification, removing the interest rate limits caps in case of securitisation and transfer of loan exposures and including an increased list of eligible borrowers under certain categories. RBI
1.1.2. RBI issues master directions on capital adequacy for RRBs
RBI has released the Master Directions on Prudential Norms on Capital Adequacy for Regional Rural Banks ("RRBs"), applicable to all RRBs. The guidelines cover the capital requirements aligned with the risk profiles of banks and specify prudential norms for capital adequacy. Permissions for transactions in specific instruments and activities will be subject to further RBI regulations and instructions. RBI
1.1.3. RBI amends gold monetisation scheme
RBI has announced the discontinuation of Medium Term and Long-Term Government Deposits ("MLTGD") under gold monetisation scheme from March 26, 2025. Banks will no longer accept gold deposits under MLTGD, though existing deposits will follow prior guidelines. Short Term Bank Deposits (STBD) remain available at banks' discretion. The amendments apply to all Scheduled Commercial Banks, excluding RRBs. RBI
1.1.4. India's foreign liabilities rise despite decline in assets
Net claims of non-residents on India increased by USD 11 Billion (United States Dollar Eleven Billion only) in Q3 FY25, reaching USD 364.5 Billion (United States Dollar Three Hundred Sixty-Four Billion and Five Hundred Million only). While Indian residents' foreign assets dropped by USD 40.1 Billion (United States Dollar Forty Billion and One hundred Million only), non-residents' claims also declined by USD 29.1 billion (United States Dollar Twenty-Nine Billion and One Hundred Million only). Reserve assets accounted for 59 per cent (fifty-nine per cent) of total financial assets. Debt liabilities rose to 53.6 per cent (fifty third point six per cent) of external liabilities. RBI
1.1.5. RBI enhances liquidity support for SPDs
RBI has raised the aggregate limit under the Standing Liquidity Facility for Standalone Primary Dealers ("SPDs") from INR 10,000 Crore (Indian Rupee Ten Thousand Crore only) to INR 15,000 Crore (Indian Rupee Fifteen Thousand Crore only), effective April 2, 2025. The individual limits for SPDs will be communicated separately, while all other terms and conditions remain unchanged. RBI
International Financial Services Centres Authority (IFSCA)
1.1.6. IFSCA releases SEZ compliance FAQ booklet
The Office of Administrator International Financial Services Centres Authority ("IFSCA") has issued an FAQ Booklet to clarify Special Economic Zone "SEZ" Act/Rules for units in Gujarat International Finance Tec-City's International Financial Services Centre ("GIFT-IFSC"). With the administrator now handling SEZ Act approvals, businesses benefit from a unified regulatory framework. The initiative enhances operational efficiency and supports ease of doing business. IFSCA
1.1.7. IFSCA forms standing committee on insurance
IFSCA has established a Standing Committee on Insurance ("SCI") to enhance GIFT-IFSC's global stature as a leading hub for insurance and reinsurance. The SCI will support the development and regulation of the insurance ecosystem, fostering growth and ensuring GIFT-IFSC's competitiveness on the international stage. IFSCA
1.1.8. Monetary Penalties
RBI imposes monetary penalties on the following financial institutions:
|
Name of the Financial Institution |
Penalty Imposed |
Reasons |
|---|---|---|
|
INR 75,00,000/- (Indian Rupees Seventy-Five Lakh only) |
Contravention and non-compliance with certain directions issued by RBI on 'Know Your Customer ("KYC")' |
|
|
INR 10,00,000/- (Indian Rupees Ten Lakh only) |
Contravention and non-compliance with requirements relating to 'Declaration of dividends' contained in the RBI directions on 'RBI (Non-Banking Financial Company ("NBFC") – Scale Based Regulation) Directions, 2023'. |
|
|
INR 68,20,000/- (Indian Rupees Sixty-Eight Lakh Twenty Thousand only) |
Contravention and non-compliance with certain directions issued by RBI on 'Creation of a Central Repository of Large Common Exposures – Across Banks' read with 'Central Repository of Information on Large Credits ("CRILC") – Revision in Reporting' and 'Financial Inclusion - Access to Banking Services – Basic Savings Bank Deposit Account ("BSBDA")'. |
|
|
RBI imposes monetary penalty on NKGSB Co-operative Bank Limited, Mumbai |
INR 15,00,000/- (Indian Rupees Fifteen Lakh only) |
Contravention and non-compliance with certain directions issued by RBI on 'Management of Advances – Urban Co-Operative Banks ("UCBs") |
|
RBI imposes monetary penalty on The Jalna People's Cooperative Bank Ltd., Jalna, Maharashtra |
INR 75,000/- (Indian Rupees Seventy-Five Thousand only) |
Contravention and non-compliance with certain directions issued by RBI on 'Exposure Norms and Statutory / Other Restrictions- UCBs' and 'Membership of Credit Information Companies ("CICs") by Co-operative Banks'. |
|
RBI imposes monetary penalty on The Co-operative Urban Bank Ltd., Paralakhemundi, Odisha |
INR 2,70,000/- (Indian Rupees Two Lakh Seventy Thousand only) |
Contravention and non-compliance with specific directions issued by RBI under the 'Supervisory Action Framework ("SAF")' |
|
RBI imposes monetary penalty on Kerala Mercantile Co-operative Bank Ltd., Kozhikode, Kerala |
INR 50,000/- (Indian Rupees Fifty Thousand only) |
Contravention and non-compliance of provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949. |
|
RBI imposes monetary penalty on The Nizamabad District Co-operative Central Bank Ltd., Telangana |
INR 1,00,000/- (Indian Rupees One Lakh only) |
Contravention and non-compliance of provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949. |
|
RBI imposes monetary penalty on The Sholinghur Co-operative Urban Bank Limited, Vellore, Tamil Nadu |
INR 1,00,000/- (Indian Rupees One Lakh only) |
Contravention and non-compliance with certain directions issued by RBI on 'Exposure Norms and Statutory / Other Restrictions - UCBs' and KYC'. |
|
RBI imposes monetary penalty on Mikhael Capitalize Pvt. Ltd., Kerala |
INR 1,00,000/- (Indian Rupees One Lakh only) |
Contravention and non-compliance with certain provisions of 'Master Direction - NBFC – Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016' read with 'Master Direction - RBI, (NBFC - Scale Based Regulation) Directions, 2023. |
|
RBI imposes monetary penalty on The Tumkur Veerashaiva Co-operative Bank Ltd., Karnataka |
INR 50,000/- (Rupees Fifty Thousand only) |
Contravention and non-compliance with specific directions issued by RBI under 'SAF'. |
|
RBI imposes monetary penalty on Sri Ganesh Co-operative Bank Limited, Gulbarga, Karnataka |
INR 2,50,000/- (Indian Rupees Two Lakh Fifty Thousand only) |
Contravention and for non-compliance with certain directions issued by RBI on 'Exposure Norms and Statutory / Other Restrictions – UCBs' and 'Donations / Contributions for Public / Charitable purposes out of profits of UCBs' |
|
RBI imposes monetary penalty on The Vellore Co-operative Town Bank Ltd., Tamil Nadu |
INR 50,000/- (Indian Rupees Fifty thousand only) |
Contravention and non-compliance with certain directions issued by RBI under 'KYC'. |
|
INR 1,00,000/- (Indian Rupees One Lakh only) |
Contravention and non-compliance with certain directions issued by RBI on 'Co-operative Banks - Interest Rate on Deposits' and ' KYC'. |
|
|
INR 52,70,000 (Indian Rupees Fifty Two Lakh Seventy Thousand only) |
Contravention and non-compliance with directions on 'Settlement of dues payable by the borrower' issued by RBI. |
|
|
RBI imposes monetary penalty on Mahindra Rural Housing Finance Limited |
INR 3,20,000 (Indian Rupees Three Lakh Twenty Thousand only) |
Contravention and non-compliance with certain provisions of the RBI KYC Directions, 2016' and 'Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021' issued by RBI. |
|
RBI imposes monetary penalty on The Citizens Urban Cooperative Bank Ltd., Jalandhar |
INR 15,00,000 (Indian Rupees Fifteen Lakh only) |
Contravention and non-compliance with specific directions issued by RBI under 'Supervisory Action Framework (SAF)'. |
|
RBI imposes monetary penalty on The Kangra Central Co-operative Bank Ltd., Himachal Pradesh |
INR 25,00,000 (Indian Rupees Twenty Five Lakh only) |
Contravention and non-compliance with the conditions of banking license issued by RBI and related correspondence in that regard, |
|
RBI imposes monetary penalty on UCA Finvest Private Limited, New Delhi |
INR 4,10,000 (Indian Rupees Four Lakh and Ten Thousand only) |
Contravention and non-compliance with specific conditions under which the company was issued the Certificate of Registration (CoR) by RBI |
|
RBI imposes monetary penalty on Kodungallur Town Co-operative Bank Ltd., Kerala |
INR 1,00,000 (Indian Rupees One lakh only) |
Contravention and non-compliance with certain directions issued by RBI on 'Management of Advances – UCBs', 'Income Recognition, Asset Classification, Provisioning and Other Related Matters - UCBs' and 'Interest Rate on Deposits'. |
|
RBI imposes monetary penalty on Karnataka Gramin Bank, Karnataka |
INR 1,00,000 (Indian Rupees One lakh only) |
Contravention and non-compliance with certain directions issued by RBI on 'Strengthening of Prudential Norms- Provisioning Asset Classification and Exposure Limit, 2001' read with 'Income Recognition, Asset Classification and Provisioning Norms-Guidelines, 1996'. |
|
RBI imposes monetary penalty on Savery Transport Finance Ltd., Chennai, Tamil Nadu |
INR 5,00,000 (Indian Rupees Five lakh only) |
Contravention and non-compliance with certain provisions of the 'Master Direction- RBI (NBFC - Scale Based Regulation) Directions, 2023' issued by RBI. |
|
RBI imposes monetary penalty on The South Canara District Central Co-operative Bank Ltd., Karnataka |
INR 5,00,000 (Indian Rupees Five lakh only) |
Contravention and non-compliance of provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949. |
|
RBI imposes monetary penalty on Purvaja Fincap Pvt. Ltd., Tamil Nadu |
INR 50,000 (Indian Rupees Fifty thousand only) |
Contravention and non-compliance with certain provisions of 'Master Direction - RBI (NBFC -Scale Based Regulation) Directions, 2023' issued by RBI. |
|
INR 1,00,000 (Indian Rupees One lakh only) |
Contravention and non-compliance of provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949. |
|
|
INR 50,000 (Rupees Fifty thousand only) |
Contravention and non-compliance with certain provisions of the 'NBFC - Housing Finance Company (Reserve Bank) Directions, 2021' issued by RBI. |
1.2. Bangladesh
1.2.1. Guidelines from BB for legal entities abroad
BB permits investments up to USD 10,000 (United States Dollars Ten Thousand only) for Bangladeshi startups establishing legal entities abroad. Applications must be submitted via Authorised Dealers (ADs), who report to the Bank within specific timeframes. Resident enterprises under ten years old may invest from internal sources, not borrowings. Bangladesh Bank
1.3. Vietnam
1.3.1.Vietnam strengthens cooperation with the World Bank for economic growth
At a meeting, Ms. Mariam J. Sherman congratulated the State Bank of Vietnam (SBV) Deputy Governor on his new role and expressed the World Bank's commitment to supporting Vietnam's infrastructure projects. The Deputy Governor praised the 30 (thirty) year partnership with the WB and highlighted Vietnam's efforts to address policy discrepancies through revised laws effective in 2025. State Bank of Vietnam
1.3.2.Vietnam and IMF strengthen cooperation for economic growth and stability
Deputy Governor Nguyen Ngoc Canh expressed gratitude for International Monetary Fund ("IMF's") support in policy consultation, technical assistance, and capacity-building, urging continued collaboration to ensure macroeconomic stability and sustainable growth. Mr. Jochen Schmittmann, IMF Resident Representative for Vietnam, Cambodia, and Lao PDR, reaffirmed commitment to working closely with Vietnam, focusing on finance and banking sectors. State Bank of Vietnam
2. Trends
2.1. Centre likely to finalise DPDP Rules by April 2025
The Central Government is expected to notify the final Digital Personal Data Protection ("DPDP") Rules by April 2025, following consultations that began on January 3. The Ministry of Electronics and Information Technology (MeitY) has reviewed most comments received. The Economics Times
3. Sector Overview
3.1. RBI hosts conference for large NBFCs
The RBI held a conference on March 28, 2025, in Chennai, attended by over 200 participants, including Chairpersons of Audit Committees of the Board (ACB), MD & CEOs, and Statutory Auditors. The theme was "Shared Vision, Shared Responsibility: Strengthening the NBFCs." Deputy Governor Swaminathan J emphasised the importance of prudent risk management and fair lending practices. The conference also featured discussions on regulatory expectations, data analytics in auditing, and challenges under Ind AS. RBI
3.2.High Court Grants Hearing on RBI's Net Owned Fund Requirement
The Madras High Court, in W.P.No.11218 of 2025, has directed the RBI to hear representations from NBFCs regarding the increased Net Owned Fund (NOF) requirement. The Federation of Indian Asset Financiers Associations challenged the RBI's 2021 circular, arguing that smaller NBFCs that do not accept public deposits should not be subject to the same financial requirements as others. The Court has allowed the petitioner association to present its concerns to the RBI's Chief General Manager by April 30, 2025. While the Court has not ruled on the validity of the circular, this decision provides a crucial opportunity for NBFCs to seek relief. Judgment
AKP Comments: It is important to note that the judgment of the Madras High Court does not grant any Extension of Time (EOT) to NBFCs for meeting the increased NOF requirements. Therefore, it is recommended to adhere to the timeline prescribed by the RBI for compliance with the circular.
3.3. New UPI Rules from April 1
Starting April 1, 2025, the National Payments Corporation of India (NPCI) will implement updated UPI guidelines for banks, apps, and third-party providers to enhance interoperability and customer experience. Banks and PSP applications must use the Mobile Number Revocation List/Digital Intelligence Platform (MNRL/DIP) to update their mobile number records at least weekly. This measure aims to reduce transaction errors caused by outdated or reassigned mobile numbers. Disconnected numbers can be reassigned after 90 (ninety) days as per the Department of Telecommunications (DoT). Times of India
4. Business Updates
4.1 Mobikwik reports INR 1.26 crore fraud by ex-employee
Mobikwik Systems reported an INR 1.26 Crore (Indian Rupee One Crore Twenty-Six Lakhs only) fraud by ex-employee Gaurav Sharma, who allegedly misused funds by falsifying merchant data between August 2023 and September 2024. The company has filed a police complaint, and Sharma is in custody. This comes amid a 40 per cent (forty per cent) decline in Mobikwik's stock post its December Initial Public Offering (IPO). Inc 42
4.2. Jio Financial Services invests INR 1,000 crore in Jio Finance
Jio Financial Services Limited has invested around INR 1,000 Crore (Indian Rupee One Thousand Crore only) in its wholly-owned subsidiary Jio Finance Limited (JFL) through a subscription of 1.73 (one point seven three) crore equity shares at INR 10 (Indian Rupee Ten only) each. Additionally, INR 85 crore (Indian Rupee Eighty-Five Crore only) was invested in Jio Payments Bank Limited (JPBL). CNBC
4.3. SPF joins PCI's bid to reinstate MDR on UPI, RuPay transactions
Startup Policy Forum ("SPF") has urged for the introduction of Merchant Discount Rate ("MDR") on Unified Payments Interface ("UPI") and Rupay debit cards. SPF emphasised the need for fair competition to prevent market consolidation by large firms, ensuring smaller fintech players can thrive. The PCI recently submitted a similar recommendation to Prime Minister Narendra Modi to address this issue. The debate on MDR continues to intensify within the digital payments landscape. Moneycontrol
4.4. BharatPe enters the breakeven zone
BharatPe reduced its losses to INR 148.8 Crore (Indian Rupee One Hundred Forty-Eight Crore and Eighty Lakh only) in the first nine months of FY24, a significant improvement from INR 491.9 crore in FY23. The company achieved Earnings Before Interest, Taxes, Depreciation, And Amortisation (EBITDA) breakeven, excluding ESOP expenses. It plans to fully acquire Trillion loans within three years, increasing its stake from 62.3 per cent (sixty two point three per cent). Additionally, BharatPe is preparing for a public listing within two years and aims to divest part of its 49 per cent (forty nine per cent) stake in Unity Small Finance Bank. Inc42
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