Reserve Bank of India: Imposes penalties on banks for norm violations

Authored by - Isha Vyas (Intern at Legal Soch Foundation)

The news deals with the situation in which the Reserve Bank of India (RBI) has imposed penalties on the State Bank of India (SBI), Indian Bank, Punjab, and Sind Bank for violating norms.

Keywords - penalty, loans, debts.

The Reserve Bank of India (RBI) has recently taken punitive steps and has imposed penalties on three owned banks including State Bank of India (SBI), Indian Bank, Punjab and Sind Bank, and Fedbank Financial Services for violating the norms .

The Reserve Bank has imposed penalties totalling a significant sum of Rs 1.3cr on State Bank of India (SBI), Rs 1.62cr on Indian Bank, Rs 1cr on Punjab and Sindh Bank, and Rs 8.80 Lakhs on Fedbank And Financial Services.

Starting with the State Bank of India (SBI), fine was imposed on it because of due negligence in managing and lending money which was played on their part, SBI sanctioned a loan to the company, the Company subsequently misused the government’s money to pay off their private debt which was strictly not allowed. Additionally, State Bank of India did not even follow the rules for loans between companies in the same group.

Similarly, Indian Bank was also penalized for not closing several accounts which were created by customers using OTP base e-KYC, procedures, in an virtual mode and were not in use anymore, also because several savings accounts were created for customers who were not eligible to maintain their savings deposit account.

Similarly, Punjab And Sind Bank was also imposed with fine for failing to credit the prescribed amount to the Depositor Education And Awareness Fund within the allotted time period which is prescribed under Section 26A of the Banking Regulation Act. Thus, this resulted in the imposition of the penalty on the bank.

Lastly, Fedbank Financial Service had been negligent in reporting a fraudulent incident to Reserve Bank Of India (RBI ) as it raises a question on safeguarding the financial system and which eventually resulted in incurring a huge penalty.

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