RBI imposes monetary penalty on 14 banks including State Bank of India

The penalties have been imposed under the provisions of section 47 A (1) (c), 46 (4) (i) and 51 (1), of the Banking Regulation Act, 1949. 

Indian banks including State Bank of India, Central Bank of India, Bank of Baroda and IndusInd Bank, in total 14 banks, were imposed with monetary penalties by the Reserve Bank of India. The penalty has been imposed for not complying with provisions of directions issued by the country’s banking regulator.

The penalties have been imposed under the provisions of section 47 A (1) (c), 46 (4) (i) and 51 (1), of the Banking Regulation Act, 1949.

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At 2 crore, the highest penalty has been imposed on the  Bank of Baroda followed by Bank of Maharashtra, Central Bank of India, Credit Suisse AG, Indian Bank, IndusInd Bank Ltd, Karnataka Bank Ltd, Karur Vysya Bank Ltd, Punjab and Sind Bank, South Indian Bank Ltd, The Jammu & Kashmir Bank Ltd and Utkarsh Small Finance Bank Ltd, each of whom has to pay a penalty of Rs 1 crore. The State Bank of India has been fined a sum of Rs 50 lakh.

According to RBI, it has scrutinised the accounts of the companies of  a Group, which led them to notice that the banks had failed to comply with provisions of one or more guidelines issued by the Reserve Bank and/or are provisions of Banking Regulation Act, 1949. Following this, show cause notices were issued to the respective banks and the replies received were examined along with oral submissions, and documents before the imposition of the monetary penalty.

The provisions of RBI which were violated by these banks include:

  1. Lending to Non-Banking Financial Companies (NBFCs)
  2. Bank Finance to Non-Banking Financial Companies (NBFCs)
  3. Loans and Advances – Statutory and Other Restrictions
  4. Creation of a Central Repository of Large Common Exposures – Across Banks read with the contents of Circular on Reporting to Central Repository of Information on Large Credits (CRILC)
  5. Operating Guidelines for Small Finance Banks
  6. Section 19(2) and Section 20 (1) of the Banking Regulation Act, 1949