RBI imposes monetary penalty on North East Small Finance Bank Limited

Case Brief

RBI imposed a monetary penalty of ₹39.50 lakh on North East Small Finance Bank Limited by order dated January 30, 2023. The penalty was imposed under Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949 for non-compliance with RBI directions on prudential norms for income recognition, asset classification and provisioning, and on capital adequacy and market discipline. RBI’s inspection found that the bank failed to classify borrowal accounts as NPAs, creating a significant divergence between reported and assessed NPAs as on March 31, 2020, and also failed to make Pillar 3 disclosures for FY 2019-20 in its annual report and website.