Rupees 1 crore penalty imposed by RBI on SBI

Reserve Bank of India (RBI) has penalized the country’s largest lender State Bank of India (SBI). It did so for not complying with specific directions. Therefore, it has imposed a fine of ₹ 1 crore on it. SBI was penalized for violating rules related to frauds classification and reporting by commercial banks and select financial institutions. This was what the RBI said in a statement. Earlier this day, the central bank had imposed a penalty of ₹ 1.95 crores on Standard Chartered Bank. It was done for failing to report a cyber security incident. Fine levied on SBI for non-compliance with the directions contained in ‘Reserve Bank of India (Fraud classification and reporting by commercial banks and select FIs) directions 2016’, the RBI said in a statement.

The action against SBI is based on the deficiencies in regulatory compliance. In no way it is intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. The RBI said this too. The central bank conducted a review of SBI in a customer account maintained with it. It also conducted the examination of the scrutiny report revealed non-compliance with the directions on reporting of fraud in the said account to SBI. This is what the central bank said.  “In furtherance to the same, a notice was issued to the bank advising it to show cause why penalty should not be imposed on it for such non-compliance with the said directions,” the RBI said.

In a separate statement, the RBI imposed a Rs 1.95 crore penalty on Standard Chartered Bank for non-compliance with the directions issued by the RBI on ‘Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’, ‘Cyber Security Framework in Banks’, ‘Credit Card Operations of Banks’ and Code of Conduct in Outsourcing of Financial Services by banks’ among others. This is what the central bank said in a statement. These monetary penalties have been imposed in the exercise of powers vested in RBI under the Banking Regulation Act, 1949, it said. These actions are based on the deficiencies in regulatory compliance. However, these actions are not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, it added.

The RBI considered replies from both banks to the notices, oral submissions made during the personal hearing, and additional submissions made by the lenders. The Reserve Bank of India then came to the conclusion that the charge of contravention of non-compliance was with various norms. The RBI directions were substantiated and warranted imposition of monetary penalty on these lenders, to the extent of non-compliance. This is what the statement said.

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