The Reserve Bank of India (RBI) imposed a fine of Rs 1.72 crore and Rs one crore respectively on The State Bank of India (SBI) and Jana Small Finance Bank for non-compliance with banking regulations.
As per a statement by the monetary authority, SBI failed to comply with directions on three counts, viz. loans and advances- statutory and other restrictions, customer protection- limiting liability of customers in unauthorised electronic banking transactions and opening of current accounts by banks- need for discipline.
The penalty has been imposed under the Banking Regulation Act, 1949, said the RBI. The apex bank said that, a statutory inspection for supervisory evaluation (ISE 2023) of the bank was conducted with reference to its financial position as on March 31, 2023.
Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to SBI asking it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions.
After considering the bank’s reply to the notice as well as additional submissions made and oral submissions during the personal hearing, the RBI decided that the bank deserved imposition of monetary penalty.
The charges against SBI are that it extended a bridge loan to an entity against amounts receivable from the central/ state government by way of subsidy or reimbursement. Further the bank failed to credit (reverse the transaction) the amount involved in unauthorised electronic transactions to customer accounts within 10 working days from the date of notification by the customer and compensate customers within 90 days from the date of receipt of the complaint.
Another violation by the bank was that it opened and maintained certain current accounts in contravention of regulatory requirements.
“The action against SBI is based on 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. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank,” said the RBI.
A monetary penalty of Rs 1 crore was also imposed on Jana Small Finance Bank Ltd., for contravention of provision of Section 12B(5) of the Banking Regulation Act, 1949 (BR Act). The bank had raised paid-up share capital through allotment of Compulsory Convertible Preference Shares (CCPS) to certain persons which taken along with equity share capital held by them, made the said persons to hold more than permitted percentage of the paid-up share capital. Jana Small Finance Bank had failed to obtain previous approval of RBI for allotment of the CCPS. ANI
