RBI Slaps Penalties On SBI And Jana Small Finance Bank For Compliance Breaches

RBI Slaps Penalties On SBI And Jana Small Finance Bank For Compliance Breaches

The Reserve Bank of India (RBI) has levied a monetary penalty of ₹1,72,80,000 on State Bank of India (SBI) for non-compliance with specific regulatory directives, including those related to loans and advances, customer protection in electronic banking transactions, and the discipline required in opening current accounts. Additionally, Jana Small Finance Bank Ltd has been fined ₹1 crore for violations of provisions under the Banking Regulation Act, 1949.

The RBI, in its official statement, cited “deficiencies in regulatory compliance” as the reason for the penalties, clarifying that these actions are not intended to question the validity of any transactions or agreements entered into by the banks with their customers.

Penalty on SBI

According to the RBI, the penalty on SBI stems from:

• Extending a bridge loan to a company against government receivables such as subsidies or reimbursements.
• Failure to credit the customer’s account within 10 working days after being notified of unauthorised transactions.
• Failure to compensate the affected customer within 90 days from the date of complaint receipt.
• Opening and maintaining current accounts in violation of RBI’s directives.

Penalty on Jana Small Finance Bank

RBI found that Jana Small Finance Bank raised its paid-up share capital by issuing Compulsory Convertible Preference Shares (CCPS) to certain persons, violating RBI's capital guidelines, which led to the imposition of the ₹1 crore fine.

About the Banks

State Bank of India (SBI) is India's largest public sector bank. Its origins date back to the Bank of Calcutta established in 1806, later merged with Bank of Bombay and Bank of Madras to form the Imperial Bank of India, which was renamed SBI after nationalisation in 1955.

Jana Small Finance Bank Limited began as a microfinance institution before transitioning into a Small Finance Bank in March 2018, after receiving a license from the RBI. It is currently the fourth-largest Small Finance Bank in India.

In both cases, the RBI emphasized that the penalties were imposed for compliance failures and not for any individual customer grievance.