The Reserve Bank of India (RBI) has recently slapped a fine of Rs 2 crore on the State Bank of India (SBI), the nation’s largest public sector bank, citing non-compliance with regulatory norms. In addition to SBI, Canara Bank and City Union Bank have also faced penalties from the central bank. Canara Bank has been fined Rs 32.30 lakh, while City Union Bank faces a penalty of Rs 66 lakh.
Reasons Behind the Penalties:
SBI: The RBI conducted a Statutory Inspection for Supervisory Evaluation against SBI, which revealed that the bank had pledged more than 30 percent of the paid-up share capital of certain companies without depositing the amount in the Depositor Education and Awareness Fund within the stipulated period under the Banking Regulation Act. Following a show cause notice, the RBI’s investigation confirmed the violation of rules, leading to the imposition of the penalty on SBI.
Canara Bank: The RBI’s investigation found that Canara Bank failed to promptly rectify subsequent amendments in the information provided to credit information companies and re-upload it within seven days of receiving rejections. Additionally, Canara Bank restructured accounts that were not classified as standard assets, further breaching regulatory guidelines.
City Union Bank: The penalty on City Union Bank was imposed due to disparities in the assessment of non-performing assets compared to the bank’s reported figures. Moreover, the bank lacked a system for periodic review of risk categorization of customers’ accounts, as mandated by regulatory protocols.
In summary, the RBI’s actions against these banks underscore the importance of adhering to regulatory frameworks, and the penalties serve as a reminder for financial institutions to ensure compliance with established norms to maintain the integrity of the banking system.
