RBI imposed Rs.2 Crore Monetary Penalty on SBI for Violation of Rules

The Reserve Bank of India (RBI) has imposed a Monetary Penalty of Rs.2 Crore on the State Bank of India for contravention of provisions of sub-section (2) of Section 19 of the Banking Regulation Act, 1949 (the BR Act), and sub-section (2) of Section 26A of the BR Act read with the Depositor Education Awareness Fund Scheme, 2014.

RBI conducted the bank’s Statutory Inspection for Supervisory Evaluation (ISE 2022) based on its financial situation as of March 31, 2022.

The examination of the Risk Assessment Report/Inspection Report for ISE 2022, as well as all related correspondence, revealed, among other things, that it (i) held shares as pledgee of an amount greater than thirty percent of the paid-up share capital of certain companies, and (ii) failed to credit eligible amounts to the Depositor Education and Awareness Fund within the time frame specified in the Banking Regulation Act.

As a result, a notice was sent to the bank instructing it to show cause why a penalty should not be levied for violating the terms of the BR Act, as specified therein.

After considering the bank’s response to the notice, oral submissions made during the personal hearing, and additional submissions made by it, the RBI determined that the aforementioned charge of violating certain provisions of the BR Act was supported and warranted the imposition of a monetary penalty.

This penalty has been imposed in the exercise of powers vested in RBI conferred under the provisions of Section 47 A (1) (c) read with Sections 46 (4) (i) and 51 (1) of the BR Act.

This action is based on deficiencies in regulatory compliance and is not intended to rule on the legitimacy of any transaction or arrangement made by the bank with its clients.