The Reserve Bank of India has imposed a monetary penalty of ₹29.55 lakh on ESAF Small Finance Bank for non-compliance with RBI directions on 'Customer Service in Banks'; the penalty was imposed under Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949. The action follows the RBI's statutory Inspection for Supervisory Evaluation (ISE 2022), based on the bank's financial position as on 31 March 2022, and represents the regulator's conclusion that the bank's response to the notice of charge was insufficient to warrant waiving the financial sanction.
ESAF Small Finance Bank is a scheduled commercial bank operating primarily across South India, with a customer base concentrated in microfinance, retail deposits, and lending to lower-income and rural segments.
CUSTOMER PROTECTION STANDARDS AT ISSUE
The violations related to the RBI's directions on 'Customer Service in Banks': the bank allowed certain Basic Savings Bank Deposit (BSBD) account holders to also hold regular savings accounts and did not close those accounts within 30 days of the BSBD account being opened.
The RBI's enforcement process followed these steps: a formal inspection under the Banking Regulation Act, the issuance of a show-cause notice to the bank setting out the alleged contraventions, an opportunity for the bank to furnish its written response and make oral submissions, and a final determination by the regulator. The authority noted that the penalty is imposed strictly for regulatory non-compliance and is not intended as a comment on any particular transaction between the bank and its customers or depositors.