RBI Penalises Bank of Baroda, GIC Housing Finance ₹66.7 Lakh for Norm Violations

Regulatory Action for Non-Compliance

The Reserve Bank of India (RBI) has imposed a penalty of ₹66.7 lakh on Bank of Baroda and GIC Housing Finance for failing to adhere to regulatory norms. The central bank announced the action on Friday, citing violations of specific directives.

Bank of Baroda has been fined ₹40 lakh for non-compliance with the RBI's guidelines on loan recovery agents and Know Your Customer (KYC) norms. The regulatory action follows a statutory inspection of the bank's financial position as of March 31, 2025.

Bank of Baroda Penalty Details

The RBI found that the public sector lender had not complied with certain provisions related to the appointment and conduct of recovery agents. The bank also failed to adhere to KYC norms in some instances, the central bank said in a statement.

The penalty is based on deficiencies in regulatory compliance and is not intended to judge the validity of any transaction or agreement between the bank and its customers. The RBI clarified that the action was taken after considering the bank's reply and oral submissions during the hearing.

GIC Housing Finance Penalty

GIC Housing Finance has been penalised ₹26.7 lakh for violating the RBI's fair lending practices code. The housing finance company was found to have not complied with the directions on loan recovery and customer grievance redressal.

The inspection of GIC Housing Finance's books revealed that the company had not implemented the central bank's instructions on the treatment of borrowers in distress. The RBI said the penalty was necessary to ensure adherence to its regulatory framework.

Both entities have been asked to pay the penalty within 14 days from the date of the RBI order. The central bank has also warned that any further non-compliance could invite stricter action.

Impact on Customers

The RBI has assured that the penalties do not affect the validity of any existing loans or transactions. Customers of both Bank of Baroda and GIC Housing Finance will continue to be serviced as usual.

The central bank has urged all financial institutions to strictly follow its guidelines to avoid such actions. It has also advised customers to report any non-compliance to the RBI's banking ombudsman.

The regulatory action comes amid a broader crackdown by the RBI on non-compliance in the banking and financial sector. The central bank has been closely monitoring lenders for adherence to its norms on customer protection and transparency.

The penalties are expected to serve as a deterrent for other financial institutions. The RBI has made it clear that it will not tolerate any deviation from its prescribed standards.