RBI Slaps Rs 1 Crore Penalty On State Bank; Know Why
New Delhi: The Reserve Bank of India (RBI) has imposed a penalty of Rs 1 crore on State Bank of India (SBI) for deficiencies in regulatory compliance.
“The Reserve Bank of India (RBI) has, by an order dated November 16, 2021, imposed a monetary penalty of Rs 1 Crore on State Bank of India for contravention of sub-section (2) of section 19 of the Banking Regulation Act, 1949. This penalty has been imposed in 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,” RBI said in a statement.
An inspection found that the SBI had held shares in borrower companies, as pledgee, of an amount exceeding 30% of paid-up share capital of those companies, in contravention of RBI guidelines.
“The Statutory Inspections for Supervisory Evaluation (ISE) of the bank was conducted by 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 per cent of paid-up share capital of those companies,” RBI stated.
After taking into account SBI’s submissions on the matter, the penalty was announced by RBI.