The central bank stated that this action is based on the deficiencies in regulatory compliance observed relating to the period FY 2018-19 to FY 2021-22 and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

In a statement, RBI said that the penalty is for non-compliance with certain provisions of the directions issued by the central bank on the Internal Ombudsman Scheme, 2018, Fair Practices Code for Lenders, credit card operations of banks, managing risks, and the code of conduct in outsourcing of financial services by banks and recovery agents engaged by banks.

The RBI said that the private sector bank failed to ensure that the loan recovery agents engaged by it during those periods did not resort to intimidation or harassment and that it did not ensure police verification of the agents before employing them.

The private lender said that it has further strengthened its internal processes and procedures around these aspects. The bank has always endeavored to maintain the highest standards of compliance and culture within the organization and shall continue to do so, it added.

RBL Bank is a private sector lender. It offers specialized services under five business verticals namely: corporate & institutional banking, commercial banking, branch & business banking, retail assets and treasury and financial markets operations. As of 31 December 2022, the bank has 516 bank branches and 1,168 business correspondent branches, of which 298 are banking outlets.

The bank reported 34% rise in net profit to Rs 209 crore on a 14% increase in total income to Rs 2,987 crore in Q3 FY23 over Q3 FY22.

Shares of RBL Bank gained 2.30% to Rs 140.30 on the BSE.