SBI Got ₹1 Cr Penalty from RBI

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RBI imposed a penalty of ₹1cr on SBI on account of the exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with sections 46 (4) (i) and 51 (1) of the Act.

The penalty action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered by the bank along with its customers, stated by RBI.

₹1Cr-penalty-on-SBI

The Statutory Inspections for Supervisory Evaluation (ISE) of the bank was conducted by the RBI with reference to its financial positions as on March 31, 2018, and March 31, 2019, and the examination of the Risk Assessment Reports, Inspection Report, and all related correspondence pertaining to the same, revealed, inter-alia, contravention of sub-section (2) of section 19 of the Act to the extent the bank held shares in borrower companies, as pledgee, of an amount exceeding thirty percent of paid-up share capital of those companies.

Hence RBI issued the penalty notice, advising to show the cause as to why penalty should not be imposed on it for contravention of the aforesaid provisions of the Act. After the consideration, oral submissions have been made during the personal hearing and additional submissions, with that, said, RBI came to the conclusion that the charge of contravention of the aforesaid provisions of the Act was substantiated and warranted imposition of monetary penalty on the bank, to the extent of contravention of the aforesaid provisions of the Act.

 

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