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RBI Fines SBI Rs 2 Crore, Canara Bank Rs 32 Lakh for Regulatory Lapses

RBI penalizes SBI with Rs 2 crore and Canara Bank Rs 32 lakh for lapses in regulatory compliance, underscoring banking regulation adherence

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The Reserve Bank of India (RBI), in a decisive move on Monday, imposed financial penalties on two major banking institutions for lapses in regulatory compliance. The State Bank of India (SBI), the country’s largest lender, has been fined Rs 2 crore, while Canara Bank faces a Rs 32 lakh penalty.

Detailed Inspection Reveals SBI’s Compliance Issues

An in-depth statutory inspection by the RBI of SBI’s financials as of March 31, 2022, unearthed several compliance issues. Notably, SBI was found in possession of shares amounting to more than 30% of the paid-up share capital in certain companies, a clear breach of regulatory norms. Additionally, SBI failed to allocate the requisite funds to the Depositor Education and Awareness Fund within the designated timeframe, as mandated by the Banking Regulation (BR) Act.

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Following these findings, the RBI issued a formal notice to SBI, questioning why penalties should not be enforced for these violations. After reviewing SBI’s responses and considering both the written and oral submissions during the hearing, the RBI concluded that the violations were significant enough to warrant a monetary penalty.

Canara Bank’s Regulatory Missteps

In the case of Canara Bank, the RBI pinpointed two primary issues. Firstly, the bank did not address and rectify erroneous data rejected by Credit Information Companies (CICs) within the prescribed seven-day period. Secondly, Canara Bank was found restructuring certain accounts that did not meet the ‘standard asset’ criteria as of March 31, 2021, against existing directives.

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These penalties underscore the RBI’s commitment to maintaining stringent regulatory compliance within India’s banking sector. Both SBI and Canara Bank were penalized for failing to adhere to specific provisions of the BR Act and other regulatory directives, highlighting the importance of compliance in the banking industry.

 

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