RBI imposes monetary penalty on Tamilnad Mercantile Bank Limited

Case Brief

RBI imposed a monetary penalty of Rs 1,31,80,000 on Tamilnad Mercantile Bank Limited for non-compliance with RBI directions on ‘Interest Rate on Advances’ and ‘Central Repository of Information on Large Credits (CRILC) - Revision in Reporting’. The case arose from the Statutory Inspection for Supervisory Evaluation (ISE 2022). RBI found that the bank failed to benchmark certain floating-rate MSME loans to an external benchmark lending rate, used multiple benchmarks within the same loan category, did not price certain floating-rate loans with reference to the applicable benchmark rate, and wrongly reported the external rating of certain borrowers to CRILC. The penalty was imposed under section 47A(1)(c) read with section 46(4)(i) of the Banking Regulation Act, 1949.