RBI imposes ₹2 crore penalty on SBI; also fines Canara Bank, City Union Bank

Reserve Bank of India has imposed a penalty of ₹2 crore on State Bank of India for “contravention of provisions of sub-section (2) of Section 19 of the Banking Regulation Act, 1949 (the BR Act), and sub-section (2) of Section 26A of the BR Act read with the Depositor Education Awareness Fund Scheme, 2014.”

The Statutory Inspection for Supervisory Evaluation for FY22 revealed that SBI held shares as pledgee of an amount exceeding 30 per cent of paid-up share capital of certain companies. It also failed to credit eligible amount to Depositor Education and Awareness Fund within the period prescribed in the BR Act.

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The central bank also imposed a fine of ₹32.30 lakh on Canara Bank for non-compliance with certain directions on ‘Data Format for Furnishing of Credit Information to Credit Information Companies and other Regulatory Measures’, ‘Resolution Framework 2.0 – Resolution of Covid-19 related stress of Micro, Small and Medium Enterprises (MSMEs)’ and ‘Resolution Framework - 2.0: Resolution of Covid-19 Related Stress of Individuals and Small Businesses’.

A review of the FY22 financials showed that the bank failed to rectify the rejected data and upload the same with the Credit Information Companies (CICs) within seven days of receipt of such rejection report from the CICs, and restructured certain accounts which were not standard assets as on March 31, 2021 under the extant directions.

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City Union Bank also faced a penalty of ₹66 lakh for non-compliance with certain directions on ‘Prudential Norms on Income Recognition, Asset Classification and Provisioning Pertaining to Advances - Divergence in NPA Accounts’ and KYC guidelines. There was significant divergence between the NPAs reported by the bank and as assessed during the RBI inspection. Further, the lender did not put in place a system of periodic review of risk categorisation of accounts of its customers.

In addition, RBI also imposed a fine of ₹16 lakh on Odisha-based NBFC Ocean Capital Market for non-compliance with certain regulatory provisions for NBFCs, and certain specific directions issued by RBI to the company on submission of returns on XBRL platform.

The statutory inspection for FY22 revealed that the NBFC had delayed submission of several returns on XBRL platform, breached exposure limits on lending/investments in respect of single borrowers and single group of borrowers, and did not constitute various Committees of the Board, RBI said.

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