RBI Imposes Penalty of More than 2 Crores on 2 Major Indian Banks

On April 29, 2025, the Reserve Bank of India (RBI) enforced monetary penalties of Rs. 17,280,000 and Rs. 10,000,000 on State Bank of India (SBI) and Jana Small Finance Bank Limited, respectively.

The central bank of India imposed monetary penalty on the State Bank of India (SBI) due to the non-compliance with certain instructions issued by RBI regarding ‘Loans and Advances- Statutory and Other Restrictions’, ‘Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’ and ‘Opening of Current Accounts by Banks – Need for Discipline’. Penalty was enforced in the rights of RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.

The RBI carried out the Statutory Inspection for Supervisory Evaluation (ISE 2023) of the bank, based on its financial position as of March 31, 2023. During the inspection, the RBI found that the bank had not followed certain rules. After reviewing related communication, the RBI sent a notice to the bank asking it to explain why it should not be fined for not following those rules.

The central bank of India imposed a monetary penalty on the Jana Small Finance Bank Limited for the violation of provisions of Section 12B(5) of the Banking Regulation Act, 1949 (BR Act). Penalty was enforced in the rights of RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the BR Act.

The bank raised its paid-up share capital by issuing Compulsory Convertible Preference Shares (CCPS) to certain individuals. This was reviewed in light of the rules under Section 12B(5) of the Banking Regulation Act. As a result, the bank was sent a notice asking it to explain why it should not be fined for not following this legal requirement.

This action was taken because the bank did not follow regulatory rules properly. It does not question whether any transaction or agreement between the bank and its customers is valid. Also, the fine does not prevent the RBI from taking any other actions against the bank in the future.

Refer to the official notice for complete information