The Reserve Bank of India (RBI) inspected the State Bank of India (SBI) and found that SBI did not follow the RBI’s rules when it gave a loan to a company.
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The company was using government money to repay the loan, which is not allowed. SBI also did not follow the rules for loans between companies in the same group.
Mumbai: The Reserve Bank of India (RBI) has fined three state-owned banks, including State Bank of India (SBI) and Indian Bank, for violating various regulations. The central bank imposed Rs 1.30 crore on State Bank of India, Rs 1.62 crore penalty on Indian Bank, Rs 1 crore on Punjab & Sind Bank, and Rs 8.80 lakh on Fedbank Financial Services, the central bank said in separate releases.
The monetary penalty was imposed on State Bank of India and Indian Bank as it sanctioned a term loan to a corporation in lieu of or to substitute budgetary resources envisaged for certain projects, without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were sufficient to take care of the debt servicing obligations, and the repayment / servicing of which was made out of budgetary resources, the release said, as per a report in Livemint.
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RBI’s Inspectection Of SBI Results In Penalty
The Reserve Bank of India (RBI) inspected the State Bank of India (SBI) and found that SBI did not follow the RBI’s rules when it gave a loan to a company. The company was using government money to repay the loan, which is not allowed. SBI also did not follow the rules for loans between companies in the same group.
After reviewing the bank’s response to the notice, the oral submissions made during the personal hearing, and the additional submissions made by the bank, the RBI concluded that the charge of non-compliance was valid and that a monetary penalty was warranted.
RBI’s Prudential Regulations on Basel III Capital Framework
The Reserve Bank of India (RBI) on Thursday announced the issuance of the Reserve Bank of India (Prudential Regulations on Basel III Capital Framework, Exposure Norms, Significant Investments, Classification, Valuation and Operation of Investment Portfolio Norms and Resource Raising Norms for All India Financial Institutions) Directions, 2023.
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These directions are set to govern the operations of five prominent All India Financial Institutions (AIFIs), namely Export-Import Bank of India (EXIM) Bank, National Bank for Agriculture and Rural Development (NABARD), National Bank for Financing Infrastructure and Development (NABFID), National Housing Bank (NHB), and Small Industries Development Bank of India (SIDBI).
