The Reserve Bank of India (RBI) on October 18, 2021, imposed a monetary penalty of Rs one crore on State Bank of India (SBI) for non-compliance with certain directions.
The violation is related to rules pertaining to frauds classification and reporting by commercial banks and select financial institutions, the RBI said.
This action is based on the 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, the central bank said in a release.
The RBI conducted scrutiny of the bank in a customer account maintained with the bank and the examination of the scrutiny report revealed non-compliance with the directions on reporting of fraud in the said account to RBI, the central bank said.
“In furtherance to the same, a notice was issued to the bank advising it to show cause why penalty should not be imposed on it for such non-compliance with the said directions,” the RBI said.
After considering SBI’s reply, the RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty, the RBI said.
Earlier, the RBI announced a fine of Rs 1.95 crore on the Standard Chartered Bank for failing to report a cyber security incident within the prescribed time period, and failure to credit the amount involved in unauthorised electronic transactions, among other reasons.
Listing the reasons behind the move, the RBI said in a release that it imposed a penalty of Rs 1.95 crore on the Standard Chartered Bank over non-compliance with the directions issued by it regarding “customer protection”.
The RBI’s enforcement operations are conducted by the Enforcement Department. The RBI’s EFD was set up in April 2017 to separate enforcement action from the supervisory process. EFD identifies actionable violations from the inspection reports, risk assessment reports, and scrutiny reports.
Market intelligence reports, references from the top management, and complaints are also used for investigation. An Adjudication Committee then adjudicates the violations and determines the quantum of the penalty.
The penalty thus imposed would be disclosed by RBI in the form of a press release and by the regulated entity as per the disclosure norms. The regulated entity will then be required to pay the penalty within a specific period.