The Reserve Bank of India (RBI) has taken strict action against Bank of Baroda, one of the country’s largest public sector banks. In fact, the Central Bank has imposed a huge fine of Rs 63.60 lakh on Bank of Baroda for ignoring the rules related to customers and in some cases charging interest more than the prescribed limit. Along with this, GIC Housing Finance Limited has also been fined for violating rules.
Impact on the pockets of loan customers
Actually, this entire matter is directly related to the interests of common customers. RBI investigation revealed that Bank of Baroda has charged much more interest than the fixed rate on some of its loan accounts. If you understand in simple language, the bank recovered more than the EMI or interest that the customers had to pay on their loan. This is a direct violation of the ‘Fair Practices Code for Lenders’. When a common man takes a loan from a bank, he signs the terms and conditions with confidence. In such a situation, deducting more money than the fixed rate raises questions on the transparency of the banking system.
Ignoring KYC rules proved costly
Apart from the issue of interest, there was negligence on the part of the bank in the KYC process also. According to the rules of the Reserve Bank, it is mandatory to upload customer data to the Central KYC Records Registry (CKYCR) within a stipulated time. Bank of Baroda completely failed to do this in the case of many customers.
Let us tell you that RBI had audited the bank on the basis of its financial position till March 31, 2025. After this a show cause notice was issued to the bank. RBI was not satisfied with the written reply given by the bank, additional information and arguments presented during the personal hearing. If the allegations were found true, a penalty of Rs 63.60 lakh was imposed through an order dated June 30, 2026.
Regulator’s crackdown on GIC Housing Finance
The strictness of the Central Bank was not limited only to Bank of Baroda. A fine of Rs 3.1 lakh has also been imposed on GIC Housing Finance Limited. An inspection conducted by the National Housing Bank based on data till March 31, 2025, revealed that the company had not implemented its system of reviewing the ‘risk category’ of accounts every six months. After the notice, the company’s replies were examined and if the mistake was found correct, the penalty was fixed.
Leave a Reply