On September 21, 2023, the Reserve Bank of India (RBI) issued an order imposing a financial penalty of ₹1.30 Crore (Rupees One Crore and Thirty Lakh only) on State Bank of India (the bank) for non-compliance with certain directions issued by RBI on ‘Loans and Advances – Statutory and Other Restrictions’ and ‘Guidelines on Management of Intra-Group Transactions and Exposures’. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.

RBI stated that during the examination of the Risk Assessment Report/Inspection Report related to ISE 2021, and all correspondence associated with it, it was discovered that the bank had not complied with the aforementioned directions. Specifically, the bank (1) sanctioned a term loan to a Corporation (i) instead of using budgetary resources allocated for certain projects; (ii) without conducting proper due diligence on the viability and bankability of the projects to ensure that the projects generated sufficient revenue for debt payment obligations; and (iii) repaid/serviced the loan using budgetary resources, and (2) failed to adhere to the intra-group exposure limit by not considering the intra-day limit sanctioned to its group entity for the purpose of computing intra-group exposure limit. As a result, a notice was issued to the bank, asking it to show cause for its failure to comply with the RBI’s directions.

After reviewing the bank’s response to the notice, the oral submissions made during the personal hearing, and the additional submissions, RBI concluded that the charge of non-compliance was accurate and justified the imposition of a financial penalty on the bank.

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RBI imposes monetary penalty on Punjab & Sind Bank

The Reserve Bank of India (RBI) has, by an order dated September 21, 2023, imposed a monetary penalty of ₹1.00 crore (Rupees One crore only) on Punjab & Sind Bank (the bank) for non-compliance with the provisions of sub-section (2) of Section 26A of the Banking Regulation Act, 1949 (BR Act) read with directions issued by RBI on ‘The Depositor Education and Awareness Fund Scheme, 2014-Section 26A of Banking Regulation Act, 1949-Operational Guidelines’. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 51(1) of the BR Act.

This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

The Statutory Inspection for Supervisory Evaluation (ISE 2021) of the bank was conducted by RBI with reference to its financial position as on March 31, 2021. The examination of the Risk Assessment Report/Inspection Report pertaining to ISE 2021, and all related correspondence, revealed, inter alia, non-compliance with the aforementioned provisions of the BR Act and RBI directions by the bank, as it failed to credit the eligible amount to the Depositor Education and Awareness Fund within the prescribed period under Section 26A of the BR Act. Consequently, a notice was issued to the bank, requiring it to provide reasons for its failure to comply with the provisions of the BR Act and RBI directions.

After reviewing the bank’s response to the notice, the oral submissions made during the personal hearing, and the additional submissions, RBI concluded that the charge of non-compliance with the provisions of the BR Act and the RBI directions was substantiated and warranted the imposition of a financial penalty on the bank.

RBI imposes monetary penalty on Indian Bank

The Reserve Bank of India (RBI) has, by an order dated September 21, 2023 imposed a monetary penalty of ₹1.62 crore (Rupees One Crore and Sixty Two Lakh only) on Indian Bank (the bank) for non-compliance with certain directions issued by RBI on ‘Loans and Advances – Statutory and Other Restrictions’, ‘Reserve Bank of India [Know Your Customer (KYC)] Directions, 2016’ and ‘Reserve Bank of India (Interest Rate on Deposits) Directions, 2016’. This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of Section 47 A (1) (c) read with Sections 46 (4) (i) and 51(1) of the Banking Regulation Act, 1949.

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Updated: 25 Sep 2023, 06:33 PM IST