Chennai, February 1, 2025 – Equitas Small Finance Bank Limited (NSE: EQUITASBNK, BSE: 543243) has received a monetary penalty of ₹65 lakh from the Reserve Bank of India (RBI) for non-compliance with certain regulatory directions.
Penalty Details
In an order dated January 20, 2025, and received by the bank on January 31, 2025, the RBI imposed the penalty citing violations related to:- Foreclosure Charges on Floating Rate Term Loans – The bank levied foreclosure charges on 479 floating rate term loans sanctioned to individual borrowers for purposes other than business, resulting in a penalty of ₹35.40 lakh.
- Collateral-Free Agricultural Loans – The bank obtained collateral security in 2,027 agricultural loans of up to ₹1.6 lakh, violating RBI’s directive, leading to an additional ₹29.60 lakh penalty.
Regulatory Basis for Action
The penalty has been imposed under Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949. The regulatory action follows RBI's commitment to ensuring compliance with its directives on levy of foreclosure charges and credit flow to agriculture.Impact on Financials
Equitas Small Finance Bank stated that while the penalty amounts to ₹65 lakh, it does not have a material impact on the financial, operational, or other activities of the bank.Investor & Market Implications
- The regulatory action highlights the importance of compliance with RBI’s guidelines, particularly in loan structuring and foreclosure policies.
- While the financial impact is minimal, investors and stakeholders will likely monitor how the bank addresses regulatory concerns to avoid future penalties.
- The banking sector is expected to witness stricter enforcement of norms around loan practices, especially in retail and agricultural lending.
