The Reserve Bank of India (RBI) has imposed a penalty of Rs 2 crore on the State Bank of India (SBI). After this, the shares of the largest public sector lender fell a percent in the early trade on March 17.
Key Points
- In an official statement, the Reserve Bank of India stated that a penalty of Rs 2 crore has been slapped on the State Bank of India (SBI) over deficiencies in regulatory compliance.
- The monetary penalty has been imposed on the bank through an order issued by the central bank on March 15.
- The RBI press release said that this action on the bank is based on 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.
- SBI has also been asked to explain the payment of remuneration to its employees in the form of commission.
- The SBI has been penalized for “contravention of provisions of section 10 (1) (b) (ii) of the Banking Regulation Act, 1949 (the Act) and specific directions of RBI issued to the bank on payment of remuneration to employees in the form of commission.
- The penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47A (1) (c) read with sections 46 (4) (i) and 51 (1) of the Act.
The mandate for the first SOFR (Secured Overnight Financing Rate) linked ECB deal by Indian Oil Corporation Limited (IOCL) has been awarded to SBI. SOFR is a replacement for USD LIBOR (London Inter-Bank Offered Rate) which is expected to be phased out at the end of 2021.