Citibank Faces ₹39 Lakh Penalty as RBI Cracks Down on Violations

New Delhi : The Reserve Bank of India (RBI) has imposed a monetary penalty of thirty-nine lakh rupees on Citibank N.A. for non-compliance with certain provisions related to the Large Exposures Framework (LEF) and Furnishing of Credit Information to Credit Information Companies (CICs). The penalty was levied under the Banking Regulation Act, 1949, following an examination of Citibank’s risk assessment report and related documents. The apex bank identified that the bank had failed to adhere to regulatory guidelines, leading to the imposition of this penalty as a corrective measure.

In a separate action, the RBI imposed a monetary penalty of six lakh twenty thousand rupees on Asirvad Micro Finance Limited, a non-banking financial company (NBFC). The company was found to have violated certain provisions of the Reserve Bank of India (Non-Banking Financial Company – Microfinance Institutions) Directions, 2011. Specifically, Asirvad Micro Finance failed to report the household income of some borrowers to Credit Information Companies, an essential requirement to ensure responsible lending practices. Additionally, the company did not provide factsheets to certain gold loan customers, which is mandated to ensure transparency and informed decision-making. Furthermore, the institution failed to implement a system of automatic escalation for complaints that were either partially or wholly rejected by its internal grievance redressal mechanism, which should have been forwarded to the Internal Ombudsman for a final decision.

Additionally, the RBI has penalized JM Financial Home Loans Limited, another NBFC, with a monetary fine of one lakh fifty thousand rupees. The company was found to be in violation of certain provisions of the RBI’s Fair Practices Code, which mandates financial institutions to disclose the methodology used for risk gradation and the rationale for charging different interest rates to various categories of borrowers. The RBI’s review revealed that JM Financial Home Loans Limited did not provide adequate transparency regarding these aspects, thereby compromising customer awareness and trust.

The RBI emphasized that these penalties are a consequence of deficiencies in regulatory compliance and are intended to reinforce the importance of adhering to the prescribed guidelines. The central bank clarified that the imposition of these penalties does not question the validity of any transactions or agreements entered into by the respective entities with their customers.