The Reserve Bank of India (RBI) has levied a penalty of Rs 1.72 crore on the State Bank of India (SBI) for multiple instances of non-compliance with key regulatory directives. The central bank’s action comes following a detailed supervisory review, which highlighted several deviations from mandated banking norms.
In a statement issued on Friday, the RBI cited violations related to its instructions on “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.” The penalty was imposed under the provisions of the Banking Regulation Act, 1949.
The decision follows a Statutory Inspection for Supervisory Evaluation (ISE 2023) conducted by the RBI, which assessed SBI’s operations and compliance based on its financial standing as of March 31, 2023. Subsequent findings led to the issuance of a show-cause notice to the public sector lender, asking it to explain why punitive action should not be taken for its regulatory failures.
According to the RBI, SBI extended a bridge loan to an entity based on receivables from the Central or State Government in the form of subsidies or reimbursements, a move not in alignment with the prescribed norms. Further, the bank was found to have delayed crediting customer accounts with the amounts involved in unauthorised electronic transactions, failing to do so within the stipulated 10 working days. In some instances, compensation to affected customers was also delayed beyond the 90-day window mandated by the regulator.
Improper Opening And Maintenance Of Accounts
Another area of concern was the improper opening and maintenance of certain current accounts, which contravened regulatory guidelines designed to ensure financial discipline and transparency.
The RBI clarified that the penalty pertains strictly to shortcomings in regulatory compliance. “The action (against SBI) is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by the RBI against the bank,” the RBI statement noted.
