Synopsis: The RBI penalized 14 banks for a total of Rs. 14.5 crores over breach of multiple norms. This also included the country’s largest bank i.e. State bank of India on which a penalty of Rs. 50 lakh was levied.
The list also includes the Bank of Baroda which was fined Rs 2 crore. Indusind Bank, Bandhan Bank, Credit Suisse AG, Central Bank of India, Bank of Maharashtra, Indian Bank and Utkarsh Small Finance Bank were asked to pay Rs 1 crore as a fine.
The regulatory body for Banking & Finance and Monitory policy the RBI imposed the penalty on Wednesday, 7th of July 2021. The lenders were fined for non-compliance with certain provisions of restrictions and directions issued by the regulator on
- Lending to Non-Bank lenders
- Restrictions and provisions on loans and advances
- Reporting to the central database on large exposures.
RBI stated that these irregularities came into notice when an audit was performed. The audit pointed out that the banks had completely failed to comply with the provisions of the Banking Regulation Act. Notices were issued to the respective banks advising them to show reason as to why a fine should not be imposed for not following provisions of the regulation act.
After further scrutinizing the responses of the banks which also included an oral submission which was made at the personal hearings, the regulatory body RBI concluded that it warranted imposition of monetary penalty on the banks.
The RBI also stated that the fines have been imposed in compliance and under the powers vested in RBI as per the provisions of section 47 A (1) (c) 46 (4) (1) and 51 (1) of the Banking Regulation Act, 1949.
This penalty as per the sections is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered with their customers of any bank.
