The Reserve Bank of India (RBI) on Monday imposed a monetary penalty on the State Bank of India (SBI), Punjab & Sind Bank, and Indian Bank owing to non-compliance with certain regulations. The central bank imposed Rs 1.30 crore on State Bank of India, Rs 1.62 crore penalty on Indian Bank, Rs 1 crore on Punjab & Sind Bank, and Rs 8.80 lakh on Fedbank Financial Services, the central bank said in separate releases.
According to an RBI statement, the State Bank of India has been fined with a penalty of Rs 1.3 crore for failing to comply with specific directives issued by the RBI concerning 'Loans and Advances: Statutory and Other Restrictions' and 'Guidelines on Management of Intra-Group Transactions and Exposures'.
Meanwhile, Indian Bank is charged with Rs 1.62 crore for non-compliance with 'Loans and Advances – Statutory and Other Restrictions', along with 'Reserve Bank of India [Know Your Customer (KYC)] Directions, 2016' and 'Reserve Bank of India (Interest Rate on Deposits) Directions, 2016'.
The monetary penalty was imposed on the State Bank of India and the Indian Bank because they authorised a term loan to a company in lieu of or as a substitute for budgetary resources intended for specific projects, without performing due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were adequate to take care of the debt servicing obligations, and the repayment and servicing of which were made out of budgetary resources, the release said.
State Bank of India also failed to comply with the intra-group exposure limit because it did not take into account the intra-day limit authorised to its group entity when determining the intra-group exposure limit.
Further, the release stated that the Indian Bank opened several savings accounts in the names of customers who were ineligible to maintain savings deposit accounts and continued to allow operations on several accounts opened using OTP-based e-KYC in non-face-to-face mode even after one year had passed without carrying out customer due diligence procedure.
Punjab & Sind Bank has to pay a fine of Rs 1 crore for failing to comply with regulations on 'The Depositor Education and Awareness Fund Scheme, 2014–Section 26A of Banking Regulation Act, 1949–Operational Guidelines'.
The monetary fine was imposed because Punjab & Sind Bank did not credit the appropriate sum to the Depositor Education and Awareness Fund within the time frame required under Section 26A of the BR Act.
Additionally, Fedbank Financial Services Limited has been subjected to a penalty of Rs 8.80 lakh for its failure to adhere to certain provisions outlined in the directions regarding monitoring fraud in non-banking financial companies (NBFCs).
Image source: Republic World