Reserve Bank of India, on March 13, imposed a penalty of ₹1.3 crore on Tamilnad Mercantile Bank for non-compliance with directions on ‘Interest Rate on Advances’ and ‘Central Repository of Information on Large Credits (CRILC) - Revision in Reporting’.

The supervisory inspection for FY22 showed that the bank had failed to benchmark interest rates on certain floating rate loans to MSMEs to an external benchmark lending rate; had adopted multiple benchmarks within the same loan category, and failed to price certain floating rate loans with reference to the actual benchmark rate applicable. It also wrongly reported external rating of certain borrowers to CRILC.

The central bank also fined DCB Bank ₹63.6 lakh for breach of norms on ‘Interest Rate on Advances’, it said in a separate release.

RBI said that the inspection for FY22 revealed that the bank failed to reset the interest rates at the prescribed periodicity in certain MCLR linked floating rate advances. It also failed to benchmark the interest rate of certain floating rate retail and MSME loans to an external benchmark lending rate.