RBI Penalises City Union Bank, Two NBFCs Over Lending, Governance and KYC Compliance Lapses

The Reserve Bank of India (RBI) has imposed monetary penalties on City Union Bank Limited, Newa Investments Private Limited, and Mintifi Finserve Private Limited for separate compliance failures identified during supervisory inspections.

City Union Bank was fined ₹10.10 lakh for non-compliance with RBI directions on priority sector loan accounts and reporting obligations relating to Self Help Group (SHG) members.

RBI found that the bank had levied loan-related charges on certain agriculture priority sector loans up to ₹25,000. It also failed to report SHG member-level data to Credit Information Companies (CICs).

Separately, RBI imposed a ₹2.70 lakh penalty on Newa Investments Private Limited for non-compliance with governance directions. The regulator found that the company had not taken prior written permission from RBI before appointing directors.

This resulted in a change in management of the NBFC, as more than 30% of its directors, excluding independent directors, were changed.

RBI also levied a ₹3.10 lakh penalty on NBFC Mintifi Finserve Private Limited for non-compliance with Know Your Customer (KYC) directions.

The regulator found that the company did not upload KYC records of certain customers to the Central KYC Records Registry within the prescribed timeline.

RBI said the actions were based on deficiencies in regulatory compliance. In City Union Bank's case, the deficiencies also related to statutory compliance.

The regulator clarified that the penalties do not affect the validity of any customer transaction or agreement.

Click here to read the circular related to City Union Bank Limited

Click here to read the circular related to Newa Investments Private Limited

Click here to read the circular related to Mintifi Finserve Private Limited