New Delhi, Nov 26 (FN Agency) Banking regulator Reserve Bank of India (RBI) has imposed Rs 1 crore monetary penalty on country’s largest lender SBI for deficiencies in regulatory compliance. “This action 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,” RBI said in a statement on Friday. The RBI imposed penalty exercising its powers under the provisions of section 47 A (1) (c) read with sections 46 (4) (i) and 51 (1) of the Banking Regulation Act, 1949.
The order to impose penalty was passed on November 16, 2021. In its statutory inspection, RBI had found the bank in contravention of sub-section (2) of section 19 of the Banking Regulation Act to the extent the bank held shares in borrower companies, as pledgee, of an amount exceeding 30% of paid-up share capital of those companies. Subsequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for contravention of the aforesaid provisions of the Act, as stated therein. “After considering the bank’s reply to the notice, oral submissions made during the personal hearing, and additional submissions made by the bank, 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,” said RBI in its statement.