The Reserve Bank of India (RBI) has penalised State Bank of India and Union Bank of India for violating certain regulatory guidelines. The penalty has been imposed on the bank for non-compliance of income recognition and asset classification (IRAC) norms, code of conduct for opening and operating current accounts and reporting of data on Central Repository of Information on Large Credits (CRILC), and fraud risk management and classification and reporting of frauds.
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Giving details of the case, it said the statutory inspection of SBI with reference to its financial position as on March 31, 2017, revealed, non-compliance with IRAC norms, sharing of information about customers with other banks, reporting of data on CRILC, fraud risk management, and classification and reporting of frauds.
Based on the inspection report and other relevant documents, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with directions issued by the RBI.
“After considering the bank’s reply and oral submissions made in the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty,” the RBI said.
The penalty, RBI said, is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
Fine on State Bank of India:
RBI fined Rs.7 crore as SBI did not comply with the directions issued by the RBI on Income Recognition and Asset Classification (IRAC) norms, code of conduct for opening and operating current accounts and reporting of data on Central Repository of Information on Large Credits (CRILC), and fraud risk management and classification and reporting of frauds.
The central Bank held the reference to its financial position as on March 31, 2017 which revealed that the lender had violated those norms.
Fine on Union Bank of India:
RBI also fined Rs.10 lakh on Union Bank for non-compliance with the directions on the cybersecurity framework in banks issued by the RBI.
The RBI accused Union Bank of India that it failed to carry out the cybersecurity framework in 2016. RBI’s examination revealed reports of generation of seven fraudulent messages worth $171 million through the SWIFT system of the bank.