RBI fines S. Bank of India for violation of Banking Regulation Act

The RBI has imposed a fine of Rs 1 crore on the State Bank of India for a violation of section 19 2 of the Banking Regulation Act, 1949, the Act informed RBI.

The action is not intended to make a statement regarding the validity of any transaction or agreement entered into by the bank with its customers, according to the official release.

As per the press note, the irregularities were identified after a Statutory Inspections for Supervisory Evaluation ISE of the bank were conducted by RBI with reference to its financial positions as on March 31, 2018, and March 31, 2019, and the examination of the Risk Assessment Reports, Inspection Reports, and all related correspondence relating to the same, revealed, in accordance with section 19 of the Act.

A pledgee, mortgagee or absolute owner of a company or thirty percent of its paid-up share capital or reserves, whichever is less, is not allowed by section 19 2 of the Act. After considering the bank's reply to the notice, oral submissions made during the personal hearing and additional submissions made by the bank, RBI came to the conclusion that the charge of contravention of the aforesaid provisions of the Act was substantiated and warranted imposition of monetary penalties on the bank, to the extent of violation of the aforesaid provisions of the act.