RBI to revoke license of another bank, issue show cause notice, now what will happen to customers?

The RBI has issued a show cause notice to the concerned finnserver. A media report claims that the RBI is also preparing to revoke the license of Samband Finzhiv Pvt Ltd.

Reserve Bank of India

The Reserve Bank of India has issued a show cause notice to another bank before revoking the license. The name of this fraudulent bank is ‘Sambha Finverse Private Limited’. After the fraud, the bank’s net assets fell below the RBI limit and the bank’s financial position has deteriorated in recent months. Moneycontrol has cited two people with knowledge of the case in a report.

The report said the RBI had issued a show cause notice to Sambha Finserv and asked why his license should not be revoked. The bank’s net worth has fallen sharply. The report claims that the process of revoking the license of Relationship Finserv Bank has also been initiated. However, no information has been released by the RBI in this regard. Officials at Relationship Fridge have not commented.

The bank’s MD and CEO are the main accused

In fact, Deepak Kido, managing director and chief executive officer of Samband Finserv, is being named as the main culprit in the scam. Deepak Kido has also been arrested by the Financial Crimes Branch of Chennai Police. These relationships are reported by Finserv as NBFC-MFI. According to RBI rules, a non-banking financial institution is required to maintain T-1 and T-2 capital at all times. This should be 15 percent of their risk.

As of March 2020, Finserver Pvt Ltd has reported assets worth Rs 1,461 crore. SFPL also made a profit of Rs 5.22 crore during the period. Its total debt is about 0.67 percent.

Only the top management bankrupted the bank

In October last year, the senior management had written a letter to the bank’s board of directors. The bank’s managing director along with Deepak Kido Management has been tampering with the bank’s financial books since the financial year 201-1-16, senior management staff said. A letter sent by a section of the company’s management claimed that some senior management officials were creating fake loan accounts. All this was done under the supervision of Deepak Kido, MD and CEO of the bank and Patpatre.

The letter said the bank’s current assets under management portfolio stood at Rs 1,140 crore. As of September 30 last year, the company had valued AUM at Rs 391 crore. Thus there is a difference of about 251 crores. The letter, addressed to the bank’s board of directors, has the signatures of three people, including chief financial officer James Finserv and head of internal audit.

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