The central bank examined the accounts of the “companies of a group” and observed that several banks failed to comply with certain provisions of the Banking Regulations Act 1949.
Violations
The banks were fined for violating the directions of the RBI provided in the “Lending to Non-Banking Financial Companies (NBFCs),” “Bank Finance to Non-Banking Financial Companies (NBFCs)” and “Loans and Advances – Statutory and Other Restrictions.” The banks were also reportedly non-compliant with some provisions in the “Creation of a Central Repository of Large Common Exposures – Across Banks” relative to the contents of the circular on “Reporting to Central Repository of Information on Large Credits” and “Operating Guidelines for Small Finance Banks.” The RBI issued notice to the banks telling them to show cause why they should not be penalized. Despite receiving replies, the central bank pursued imposing the fines after further examination of the charges.
Penalized banks
The penalized banks include the Bandhan Bank Ltd., Bank of Baroda, Bank of Maharashtra, Central Bank of India, Credit Suisse AG, Indian Bank, IndusInd Bank Ltd., Karnataka Bank Ltd., Karur Vysya Bank Ltd., Punjab and Sind Bank, South Indian Bank Ltd., State Bank of India, Jammu & Kashmir Bank Ltd., and the Utkarsh Small Finance Bank Ltd. Bank of Baroda received a penalty of Rs 2 crore (~$166,000 or 20 million Indian rupees), IndusInd Bank, Bandhan Bank, Credit Suisse AG, Central Bank of India, Bank of Maharashtra, Indian Bank, Utkarsh Small Finance Bank were asked to cough up Rs 1 crore (~$133,000 or 10 million Indian rupees) as fine. A penalty of Rs 50 lakh (~$74,000 or 5 million Indian rupees) was imposed on State Bank of India. Recommended content: To see more statistics on banks’ violations worldwide see our Bank Fines 2020 report. [robinhood]
