The Reserve Bank of India on Monday slapped a fine of Rs 1 crore on State Bank of India. This action is based on deficiencies in the regulatory compliance.

NSE 2.17 % for failing to comply with fraud classification rules. The regulator said it had conducted a probe in accounts maintained with SBI. Hence, it had found it deficient in reporting frauds.

Since, the  scrutiny was carried out by the RBI in a customer account maintained with the bank and the examination of the scrutiny report and all related correspondence pertaining to the same, revealed non-compliance with the aforesaid directions to the extent of delay in reporting of fraud in the said account to RBI,” the regulator said in a statement.Therefore, it also issued a notice to the lender. For non-compliance penalty imposed.

Though, after considering the bank’s reply to the notice. The oral submissions made by the bank in the personal hearing. Therefore, RBI substantiated the charge on compliance. It warranted imposition of monetary penalty,” the regulator said.

The RBI conducted the Statutory Inspection for Supervisory Evaluation with reference to its financial positions as on March 31, 2018 and March 31, 2019 and the examination of the Risk Assessment Reports, Inspection Report and all related correspondence pertaining to the same, revealed, inter-alia, contravention of sub-section (2) of section 19 of the Act to the extent the bank held shares in borrower companies, as pledgee, of an amount exceeding thirty per cent of paid-up share capital of those companies, RBI said.

Final Words

The fine was levied after taking into account submissions by SBI, RBI said. The RBI was’nt intended to pronounce the validity of transactions and agreement. Fine  entered into by the bank with its customers. Therefore, RBI has taken initiative to curb the fraud that are taking place at large. Hence, RBI imposed a penalty on State Bank of India of Rs 1 crore.