Tuesday, 29 November 2022

Reserve Bank of India impose fine of 1 crore on SBI

Reserve Bank of India impose fine of 1 crore on SBI

The (RBI) Reserve Bank of India has imposed a monetary fine of Rs 1 crore on the country's largest bank, SBI, for holding shares in borrower companies of an amount limiting to thirty percent of the paid-up share capitals of those firms.

Sub-section (2) of Banking Regulation Act, 1949, says that no banking shall be holding shares in any company, whether as pledgee, absolute owner, or mortgagee, of an amount exceed to 30 percent of the paid-up share fund of that company or thirty percent of its own paid-up share fund and reserves.

The central bank said.

"The statutory (ISE) inspections for supervisory evaluation of the bank was conducted by Reserve Bank of India with reference to its economical positions as on March 31, 2018 & March 31, 2019 and the examination of risk assessment report, inspection report and all related correspondence concern to the same, disclose, inter-alia, contravention of sub-section (2) of section 19 of Act to the reach the bank held share in borrower companies, as pledgee, of an amount limiting thirty percent of paid-up share capital of those companies",

Reserve Bank of India impose fine of 1 crore on SBI 1twitter image: @TheOfficialSBI

Read More: RBI imposed a ₹1 crore fine on Paytm Payments Bank Limited

RBI released a notice to the bank asking why a penalty should not be imposed on it. Upon considering the bank's reply, it concluded that the charge of breach of the Act was substantiated and warranted imposition of finance penalty on the bank.

This is the second instance in many months that the regulator has imposed a monetary penalty on SBI. Last month, RBI imposed a fine of Rs 1 crore on the bank for not complying with instructions issued by the Reserve Bank of India about fraud classification and reporting by commercial banks.

The RBI had said in a statement.

"This action is based on the shortage in regulatory compliance. It is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers",

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