RBI Imposes Penalty On 3 Banks For Irregularities, SBI To Pay Rs 1.3 Crore – News18

The Reserve Bank of India (RBI) announced on September 25 that it had imposed penalties on top state-owned banks in the country including State Bank of India, Indian Bank and Punjab & Sind Bank. These penalties were enforced for violating several regulatory norms while underscoring the RBI’s commitment to upholding banking standards and ensuring customer protection.

In a separate statement, RBI imposed fines including Rs 1.30 crore on State Bank of India, a penalty of Rs 1.62 crore on Indian Bank, Rs 1 crore on Punjab & Sind Bank and Rs 8.80 lakh on Fedbank Financial Services Ltd.

The State Bank of India has been fined Rs 1.3 crore for its failure to adhere to specific directives issued by the RBI concerning Loans and Advances: Statutory and Other Restrictions and Guidelines on Management of Intra-Group Transactions and Exposures, as outlined in an RBI announcement.

Reserve Bank of India revealed that the Indian Bank was penalised with Rs 1.62 crore due to its non-compliance with regulations related to Loans and Advances- Statutory and Other Restrictions, KYC (Know Your Customer) procedures and the RBI (Interest Rates on Deposits) Directions, 2016.

Punjab & Sind Bank has been fined Rs 1 crore for failing to adhere to specific provisions of the Depositor Education and Awareness Fund Scheme. Besides this, Fedbank Financial Services Ltd has been penalised Rs 8.80 lakh for not adhering to particular provisions designed to prevent fraud in NBFCs.

SBI and the Indian Bank incurred monetary penalties because they provided a term loan to a corporation instead of utilising the designated budgetary funds for specific projects. This action was taken without conducting adequate assessments to ascertain the projects’ feasibility and financial viability.

This was done to ensure the project revenues could cover debt servicing obligations. The release reported that the loan repayment and servicing were also financed from budgetary resources.

In its clarification, the RBI has underscored that the penalties imposed on the banks and the NBFC result from regulatory compliance shortcomings.