RBI imposes financial penalty on this small financial bank

The Reserve Bank of India (RBI) on Friday imposed a monetary penalty in the amount of 57.75 lakh on Suryoday Small Finance Bank for non-compliance. RBI said this action is based on shortcomings in regulatory compliance and is not intended to rule on the validity of any transaction or agreement the bank has entered into with its customers. On the BSE, stocks of smaller corporate banks were bearish.

Prior to the sanction, RBI had carried out a statutory inspection of the bank regarding its financial condition as of March 31, 2019, as well as a review of the Inspection Report (IR) and all related correspondence.

During the inspection, RBI found non-compliance with its instructions to the extent that the bank failed to (i) provide FMRs to RBI, with respect to certain cases of fraud, within three weeks of their date of detection, and (ii) to refer to State law enforcement authorities certain cases of fraud committed by its personnel.

Following this, RBI had issued a notice to the bank advising it to justify why a penalty should not be imposed on it for non-compliance with the said instructions.

“After reviewing the bank’s response to the notice and oral submissions made at the personal hearing, RBI has concluded that RBI’s allegation of non-compliance with the above instructions is well-founded and warrants the imposition of a monetary penalty, to the extent of non-compliance with these guidelines,” RBI said in a statement.

On the ESB, the SFB share closed at 80 each down 1.3%. It is a small cap banking sector with a market valuation of 849.27 crore from now.

On Friday, the bank announced that it would review and approve the Bank’s unaudited financial results for the quarter ended June 30, 2022 (Q1FY23) on August 4.

Suryoday Small Finance Bank is a new-age bank which was commissioned on 23rd January 2017. It is one of 10 companies and the only one in Maharashtra to have obtained a “Small Finance Bank” license from the Reserve Bank of India (RBI ). Currently, it has more than 1.4 million customers.

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