The Reserve Bank of India (RBI) has wielded its regulatory authority, slapping substantial penalties on major banks for non-compliance with various norms. State Bank of India (SBI), Canara Bank, and City Union Bank find themselves in the regulatory crosshairs, with fines totaling almost Rs 3 crore.
State Bank of India (SBI)
The central bank announced a penalty of Rs 2 crore on SBI, citing violations related to the Depositor Education Awareness Fund Scheme, 2014. The penalty extends to discrepancies in shareholding, exceeding 30% of the paid-up share capital of a company. While imposing the penalty, the RBI clarified that this action is rooted in regulatory compliance shortcomings and doesn’t question the validity of the bank’s transactions or agreements with customers.
Canara Bank
Canara Bank faced a penalty of Rs 32.30 lakh for failure to rectify rejected data promptly. The bank was also reprimanded for not uploading the corrected data to credit information companies within seven days of receiving a rejection report. The penalty underscores the importance of adherence to regulatory directives and timely rectification of discrepancies.
City Union Bank Limited
City Union Bank Limited bore the brunt of a hefty penalty, amounting to Rs 66 lakh. The RBI found the bank in violation of ‘Prudential Norms on Income Recognition, Asset Classification, and Provisioning Pertaining to Advances.’ Additionally, non-compliance with Know Your Customer (KYC) directions was noted. The central bank expressed concern over a significant divergence in the reported non-performing assets, emphasizing the absence of a periodic review system for risk categorization of customer accounts.
Ocean Capital Market Ltd, Rourkela, Odisha
The regulatory crackdown extended beyond traditional banks, with Ocean Capital Market Ltd, a non-banking financial company, facing a penalty of Rs 16 lakh. The penalty was levied for non-compliance with provisions governing such entities.
In all cases, the RBI clarified that the penalties are a consequence of regulatory compliance shortcomings and do not pass judgment on the validity of specific transactions or agreements entered into by the entities with their customers.