RBI imposes penalty worth Rs. 4.7 cr on SBI, 3 others; cancels Kapol Co-operative Bank licence
The Reserve Bank of India (RBI) slapped fines on the State Bank of India, Indian Bank, Punjab & Sind Bank, and Fedbank Financial Services for violating norms.
The RBI said in separate press statements, “A penalty of Rs.1.3 crore was imposed on State Bank of India (SBI), Rs.1.62 crore on Indian Bank, Rs.1 crore on Punjab & Sind Bank, and Rs.8.80 lakh on Fedbank Financial Services.”
The fine was imposed on SBI and Indian Bank as they sanctioned a term loan to a corporation in lieu of or to substitute budgetary resources envisaged for certain projects, without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were sufficient to take care of the debt servicing obligations, and the repayment/ servicing of which was made out of budgetary resources, the RBI said.
In addition, the SBI failed to adhere to the intra-group exposure limit, as it did not consider the intra-day limit sanctioned to its group entity for the purpose of computing the intra-group exposure limit.
Indian Bank was fined as it allowed operations and did not close several accounts opened using OTP-based e-KYC in non-face-to-face mode, even after the expiry of one year without conducting customer due diligence procedure, and opened several savings accounts in the names of customers not eligible to maintain savings deposit account, the RBI statement said.
Similarly, Punjab & Sind Bank failed to credit the eligible amount to a Depositor Education and Awareness Fund within the period prescribed under Section 26A of the BR Act, due to which the monetary penalty was imposed.
Fedbank Financial Services has been fined as it delayed the reporting of fraud to the RBI.
Besides, the RBI also cancelled the licence of The Kapol Co-operative Bank Limited, Mumbai. The RBI says the bank ceases to carry on banking business with effect from the close of business on September 25, 2023.
The licence was cancelled as the bank does not have adequate capital and earning prospects. The continuance of the bank is prejudicial to the interests of its depositors, says the RBI, adding that with its present financial position, it’ll be unable to pay its present depositors in full, and public interest will be adversely affected if it is allowed to carry on its banking business any further.
[With Inputs from IANS]
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