RBI imposes Rs 1 crore penalty on State Bank of India for violating rules

In a major action against the State Bank of India (SBI), the Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 1 crore on the bank for deficiencies in regulatory compliance.

In a statement, RBI said that the penalty has been imposed by an order dated November 16, 2021. As per the central bank, Statutory Inspections for Supervisory Evaluation (ISE) of SBI was conducted with reference to its financial positions as on March 31, 2018 and March 31, 2019.

The examination of the risk assessment reports, inspection report and all-related correspondence pertaining to the same revealed contravention of a provision of Banking Regulation 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".

A show-cause notice was issued to the bank and after considering the bank's reply to the notice, oral submissions, and additional submissions made by the bank, the central bank said it came to the conclusion that the charge of contravention of the provisions of the Act was substantiated and warranted imposition of monetary penalty.

RBI has also clarified that the penalty is based on deficiencies in regulatory compliance and was not intended to pronounce upon the validity of any transaction or agreement entered into by SBI with its customers.