Reserve Bank has imposed Rs 10 lakh fine on Equitas Small Finance Bank (SFB) as the company was selling mutual fund, pension and insurance products without taking approval from the regulator.
The Reserve Bank of India (RBI) has imposed, on March 1, 2018, a monetary penalty of Rs 1 million on Equitas Small Finance Bank Limited for non-compliance with one of the licensing conditions stipulated by RBI, the apex bank said in a notification.
“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 RBI said 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 banking license to the bank, it said further.
After considering the bank’s reply and oral submissions during the personal hearing, RBI came to the conclusion that the charge of non-compliance with one of the licensing conditions stipulated by RBI was substantiated and warranted imposition of monetary penalty, RBI gave as a background information about levy of this penalty on the bank.
Equitas Small Finance Bank (ESFBL) had started its banking operations from Chennai in September 2016.
The RBI had issued licenses to ten entities in September 2015 to provide basic banking services like accepting deposits and lending to unserved and underserved, including small business units, small and marginal farmers, micro and small industries and unorganised sector entities.