Introduction
State Bank of India has received a blow from the RBI. The country's central bank i.e. the Reserve Bank has always been taking action against those who ignore the rules of the financial sector. In recent times, the increasing strictness of the RBI is visible through one big action after another.
This time, the Reserve Bank has acted against the country's largest public bank, SBI. It fined SBI Rs 2 crore for breaking rules. Besides, penalties have also been imposed on Canara Bank and City Union Bank. Why has penalty been imposed on SBI and other banks? Know in this article.
Taking strict action against SBI, Canara Bank and City Union Bank, the Reserve Bank has imposed a fine of about ₹ 3 crore in separate cases.
Penalties Imposed
A fine of ₹2 crores has been imposed on State Bank of India, ₹66 lakh on City Union Bank, and ₹32.30 lakh on Canara Bank. This action has been taken against these banks for non-compliance with regulatory rules.
Reasons for Penalties
SBI Violations
RBI has imposed a fine of ₹2 crore on the State Bank of India for violation of regulatory compliance rules. RBI had conducted a Strategy Inspection for Supervisory Evaluation against SBI.
The Reserve Bank has said that it imposed the penalty on the State Bank of India. This was for breaking some rules of the Depositor Education Awareness Fund Scheme 2014 and the Banking Regulation Act. The report revealed that the bank had taken over 30 percent of the paid-up share capital of some companies as a pledge.
The bank did not deposit the amount in the Depositor Education and Awareness Fund on time as required by the Banking Regulation Act. RBI had given a show-cause notice to the banks. After investigating, it decided to impose this penalty on SBI for breaking the rules.
Canara Bank Lapses
At the same time, RBI has also imposed a fine of ₹ 32,30,000 on Canara Bank Limited for not following the rules. RBI found that Canara Bank had not fixed and re-uploaded amendments in the info it gave to credit bureaus.
They did not do this within seven days of getting the rejection. Also, such accounts were restructured which were not standard assets.
City Union Bank Issues
At the same time, a fine has been imposed on City Union Bank for not fulfilling some other rules including KYC. RBI said that there was a difference between the assessment of non-performing assets of City Union Bank and the report given by the bank.
Also, no system was prepared by the bank to periodically review the risk categorization session of customers' accounts. That is why a fine of ₹66 lakh has been imposed on the bank.
RBI's Vigilance
Nowadays the Reserve Bank is seen in full action mode. The Central Bank of the country is not failing to take strict action against whoever is ignoring the rules in the banking and financial sector.
The Governor of the Reserve Bank is continuously talking about strengthening risk management. After the policy review, he clearly said that financial stability is his priority.
This is the reason why the Central Bank is constantly reviewing the functioning of the banks. The action taken against Paytm Payments Bank is a direct example of this. Experts say that with the Paytm action, another big action can begin.
Conclusion
Earlier this month, a fine of ₹ 63 lakh was imposed on Bombay Mercantile Cooperative Bank. A ₹ 43.4 lakh fine was imposed on the National Cooperative Bank. They were fined for not following the rules. Along with this, the fine was also imposed on two more cooperative banks.
