RBI penalises 19 banks for violating rules on derivatives

The Reserve Bank of India (RBI) today meted out some small but long overdue penalties for a long forgotten issue. It penalised 19 banks, mostly private and foreign, for violating RBI instructions while selling derivative products.

The regulator has imposed a fine of Rs 15 lakh on names such as Axis Bank, Barclays Bank, HDFC Bank, ICICI Bank, Kotak Mahindra Bank and YES Bank.

BNP Paribas, Citibank, RBS, ING Vysya Bank, Standard Chartered and State Bank of India were fined Rs 10 lakh.

Meanwhile, Bank of America, DBS Bank, Deutsche Bank, HSBC and JPMorgan Chase Bank were fined Rs 5 lakh each.

Below is verbatim transcript of CNBC-TV18 banking editor Latha Venkatesh's comments on the issue. Also watch the video.

These penalties are for derivative products sold by banks to companies before 2007. These were usually very complicated products. At that time there was so much exuberance