RBI fines SBI, Indian Bank and Punjab & Sind Bank for breach of norms: Check details

RBI fines SBI, Indian Bank and Punjab & Sind Bank: The Reserve Bank of India (RBI) on Monday imposed fines on State Bank of India (SBI), Indian Bank, Punjab & Sind Bank, and Fedbank Financial Services for violating various norms set by the central bank.

As per separate press statements issued by it, RBI imposed a penalty of — 

• Rs 1.3 crore on SBI, 
• Rs 1.62 crore on Indian Bank, 
• Rs 1 crore on Punjab & Sind Bank; and, 
• Rs 8.80 lakh on Fedbank Financial Services.

RBI penalty on State Bank of India (SBI): Why was the bank penalised?

The central bank imposed the penalty of the State Bank of India (SBI) because — 

1) SBI sanctioned a term loan to a Corporation — 
a) in lieu of or to substitute budgetary resources envisaged for certain projects; 
b) without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were sufficient to take care of the debt servicing obligations; and, c) the repayment/servicing of which was made out of budgetary resources.

2) SBI failed to adhere to the intra-group exposure limit, as it did not consider the intra-day limit
sanctioned to its group entity for the purpose of computing intra-group exposure limit.

RBI penalty on Indian Bank: Why was the bank penalised?

As per RBI, the fine was imposed on Indian Bank as it sanctioned a term loan to a corporation in lieu of or to substitute budgetary resources envisaged for certain projects, without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were sufficient to take care of the debt servicing obligations, and the repayment/ servicing of which was made out of budgetary resources, the RBI said.

Also, the fine was imposed on Indian Bank as it allowed operations and did not close several accounts opened using OTP-based e-KYC in non-face-to-face mode, even after the expiry of one year without conducting customer due diligence procedure, and opened several savings accounts in the names of customers not eligible to maintain savings deposit account, the RBI statement said.

RBI penalty on Punjab & Sind Bank: Why was the bank penalised?

The RBI imposed a penalty of Rs 1 crore on Punjab & Sind Bank as it failed to credit the eligible amount to a Depositor Education and Awareness Fund within the period prescribed under Section 26A of the BR Act, due to which the monetary penalty was imposed.

Fedbank Financial Services fined Rs 8.80 lakh

Fedbank Financial Services was fined Rs 8.80 lakh as it delayed the reporting of a fraud to the RBI. The RBI had detected the non-compliance and issued a notice advising it to show cause as to why penalty should not be imposed on it for failure to comply with the RBI directions, following which the central bank arrved to the conclusion that it warranted imposition of monetary penalty.