RBI imposes Rs 2 crore penalty on SBI

The Reserve Bank of India (RBI) has announced on March 16, 2021 that it has fined India’s largest lending bank “State Bank of India (SBI)” with Rs 2 crore after it failed to follow the regulations in payment of remuneration to its employees through the commissions.

Highlights

The Reserve Bank of India imposed the monetary penalty of rupee 2 crore on SBI in an order dated March 15, 2021. It imposed the penalty on SBI for the contravention of provisions of section 10 (1) (b) (ii) of Banking Regulation Act, 1949. RBI also issued the specific directions to the bank on payment of remuneration to its employees in the form of commission.

Why this action was taken?

This move was taken with the central bank’s focus on regulatory enforcement issues. This move is not meant to be the judgement on merits of any transaction or arrangement between SBI and its customers.

Background

RBI had also fined the SBI with Rs 7 crore in 2019 because it violated the norms related to the non-performing assets (NPAs) and the fraud risk management.

State Bank of India (SBI)

The bank is an Indian multinational, public sector banking and the financial services statutory body. It is headquartered in Mumbai. The bank is the 43rd largest bank across the world. In the year 2020, it ranked 221st in the Fortune Global 500 list of “world’s biggest corporations”. It is the only Indian bank that finds its place in the Fortune Global List. It is a nationalised bank and the largest bank in India. It accounts for 23% market share by assets and 25% share of the loan and deposits market.

History

The bank is the descends of the Bank of Calcutta. It was founded in the year 1806 through the Imperial Bank of India. Thus, it is the oldest commercial bank in the Indian subcontinent. The Bank of Madras was merged into other two presidency banks that is Bank of Calcutta and Bank of Bombay in the British India. The merger came to be known as the “Imperial Bank of India” which in the year 1955 became the State Bank of India.

Month: Current Affairs - March, 2021