SBI and Jana Small Finance Bank Slapped with Rs2.72 Crore Penalty by RBI
Moneylife Digital Team 12 May 2025
Reserve Bank of India (RBI) has imposed a penalty of Rs2.72 crore on State Bank of India (SBI) and Jana Small Finance Bank Ltd for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs1.72 crore has been imposed on SBI. Jana Small Finance Bank has been fined Rs1 crore.
 
The State-run lender has been penalised for failing to comply with specific directions issued by RBI. These include regulations related to loans and advances, statutory restrictions, customer protection measures that limit customer liability in unauthorised electronic banking transactions and the rules surrounding the opening of current accounts by banks to ensure discipline.
 
After conducting the statutory inspection for supervisory evaluation (ISE 2023), RBI observed several violations by SBI. It had extended a bridge loan to an entity against amounts receivable from the central or state government in the form of subsidies or reimbursements.
 
Additionally, SBI failed to credit through shadow reversal the amount involved in unauthorised electronic transactions to some customer accounts within 10 working days from the date of notification by the customer. It also failed to compensate some customers within 90 days of receiving their complaints. Furthermore, SBI opened or maintained certain current accounts in contravention of regulatory requirements.
 
Jana Small Finance Bank has been penalised for violating Section 12B (5) of the Banking Regulation Act (BR Act). The lender had issued or allotted compulsory convertible preference shares (CCPS) to certain individuals, which, when combined with the equity shares they already held, resulted in them holding more than the permitted percentage of the Bank’s paid-up share capital. Jana Small Finance Bank failed to ensure that these individuals had obtained prior approval from the RBI, as required under Section 12B (1) of the BR Act.
 
"After considering the reply and oral submissions of SBI and Jana Small Finance Bank during the personal hearing, RBI concluded that the charges of non-compliance with directions were substantiated and warranted imposition of monetary penalty," RBI says.
 
In both cases, RBI says the penalties are based on deficiencies in regulatory compliance and are not intended to be pronounced on the validity of any transaction or agreement they entered into with their customers.
Comments
Prathamesh Shanbhag
1 month ago
It would be good to know if RBI or ML clarifies the details because the devil lies in the details.
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