RBI Imposes Penalty On SBI and Other Banks For Violation Of Regulations (Image: x.com/@RBI)
The RBI has imposed monetary penalty on banks which have violated regulatory norms, an RBI press release said. The penalty falls on three state owned banks, the State Bank of India (SBI), Indian Bank and Punjab and Sind Bank. The SBI has been fined with Rs.1.3 crore for non-compliance of ‘Loans and Advances – Statutory and Other Restrictions’ and ‘Guidelines on Management of Intra-Group Transactions and Exposures.’
The inspection was done by the central bank with reference to the financial position of the SBI as on March 31, 2021. The SBI had sanctioned a loan to a corporation without considering ‘due diligence on the viability and bankability of the projects,’ and the bank also failed to keep up to the intra group exposure limit in this, thus notice was issued to the SBI.
On the Indian Bank, the RBI imposed a penalty of Rs. 1.62 crore for not complying with the directions issued by the RBI on Know Your Customer directions, 2016 and Interest Rate on Deposit directions 2016, along with directions on ‘Loans and Advances – Statutory and Other Restrictions.’
The Punjab and Sind Bank has been pulled up for not complying with the RBI directions on ‘The Depositor Education and Awareness Fund Scheme, 2014-Section 26A of Banking Regulation Act, 1949-Operational Guidelines,” which has to be read together with ‘the provisions of sub-section (2) of Section 26A of the Banking Regulation Act, 1949 (BR Act).’ The penalty imposed is of Rs. 1 Crore for the violations of the regulations.
Apart from the above, a monetary penalty of Rs. 8.80 lakh has also been imposed on Fedbank Financial Services Limited (company), for not complying with some of the provisions of the ‘Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016.’
The penalty has been imposed upon the banks by the RBI after considering the response of the banks to the notice issued by the RBI, other submissions by the banks – oral and additional and personal hearings in the cases, allowing the RBI to reach a conclusion that the charges of non-compliance mentioned has been substantiated and warrants an imposition of monetary penalty on the defaulting banks.
The RBI, on the press release further clarified that, these actions were based on the ‘deficiencies in regulatory compliance’ and that it is ‘not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers’.
