Reserve Bank of India has imposed a penalty of Rs 2.27 crore on RBL Bank for non-compliance with several regulatory norms on engagement of recovery agents for debt collection, between FY19 and FY22.

These include guidelines on RBI’s ‘Internal Ombudsman Scheme, 2018’, ‘Fair Practices Code for Lenders’, ‘Credit Card Operations of Banks’, ‘Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’ and ‘Recovery Agents engaged by Banks’, the central bank said in a release.

Examination of a report based on complaints received against recovery agents engaged by the bank revealed that RBL Bank had failed to properly communicate the decision of its Internal Ombudsman in certain cases.

Also read: Conservatism is not going to work always: CEO, RBL Bank

The bank had also failed to ensure that recovery agents engaged by it -- directly or through recovery agencies -- did not resort to intimidation or harassment of any kind and had completed a training course for Direct Recovery Agents, to obtain a certificate from the Indian Institute of Banking & Finance (IIBF).

It also did not ensure that pre-employment police verification of recovery agents engaged by it was carried out.

Also read: RBL Bank’s Q2FY23 net profit up 6.50 times YoY at ₹202 crore

A notice was issued to the bank advising it to show cause as to why a penalty should not be imposed. However, based on the bank’s reply, oral submissions in the personal hearing, and additional submissions made, RBI concluded that the charge warranted imposition of monetary penalty, the release said.

Related Topics