The Reserve Bank of India (RBI) on Monday (February 26) took action against the State Bank of India (SBI), City Union Bank and Canara Bank for regulatory violations.
The country's largest lender SBI was fined ₹2 crore for failing to comply with provisions of the Banking Regulation Act. An inspection by RBI revealed that SBI held shares as a pledgee, exceeding 30% of the paid-up share capital of certain companies.
Additionally, it failed to credit the eligible amount to the Depositor Education and Awareness Fund within the mandated period. The monetary penalty was imposed based on the RBI's powers vested in the Banking Regulation Act, of 1949.
Another state-owned Canara Bank faced a ₹32.30-lakh penalty for non-compliance with RBI directions regarding the '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.’
RBI noted that Canara Bank failed to rectify rejected data and upload it to credit information companies (CICs) within seven days of receiving rejection reports. It also restructured accounts that weren't standard assets as of March 31, 2021. The monetary penalty was imposed based on the Banking Regulation Act, of 1949, and the Credit Information Companies (Regulation) Act, of 2005.
Further, City Union Bank (CUB) received a ₹66-lakh penalty for non-compliance with RBI's 'prudential norms on income recognition, asset classification and provisioning pertaining to advances — divergence in NPA accounts' and 'Reserve Bank of India KYC directions, 2016'.
The inspection highlighted the significant divergence between reported non-performing assets (NPAs) and those assessed during the inspection. CUB also lacked a system for periodically reviewing the risk categorisation of customer accounts. The monetary penalty was imposed based on the Banking Regulation Act, of 1949.
