RBI fines SBI and Stanchart for non-compliance

The Reserve Bank of India (RBI) on Monday imposed a monetary penalty of Rs10 million on the State Bank of India (SBI). The penalty was imposed on the lender for non-compliance with the directions contained in ‘Reserve Bank of India (Frauds Classification and Reporting by Commercial Banks and Select FIS) Directions 2016’.

“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 RBI said in a statement.

“A scrutiny was carried out by the RBI in a customer account maintained with the bank and the examination of the scrutiny report and all related correspondence pertaining to the same, revealed, inter alia, non-compliance with the aforesaid directions to the extent of delay in reporting of fraud in the said account to the RBI.” Consequently, a notice was issued to the bank, the RBI said, advising it to show cause “why penalty should not be imposed on it for such non-compliance with the said directions”.

This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction

RBI statement

“After considering the bank’s reply to the notice and oral submissions made by the bank in the personal hearing, 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, to the extent of non-compliance with the aforesaid directions.”

Meanwhile, RBI also imposed a monetary penalty of Rs19.5 million on Standard Chartered Bank India. The penalty was imposed for non-compliance with the directions issued by the RBI on ‘Customer Protection - Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’, ‘Cyber Security Framework in Banks’, ‘Credit Card Operations of Banks’ amongst others. —