The Reserve Bank of India (RBI) imposed a penalty of Rs 2 crore ($275,651) on the State Bank of India (SBI) for violation of certain norms on remuneration to its employees in the form of commission after finding the lapses while doing statutory audits.
“RBI has, by an order dated 15 March 2021, imposed a monetary penalty of ₹2 crore SBI for contravention of provisions of section 10 (1) (b) (ii) of the Banking Regulation Act, 1949 and specific directions of RBI issued to the bank on payment of remuneration to employees in the form of commission,” the central bank said in a statement.
This action 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, it said.
RBI said that it discovered the regulatory breach after statutory inspection of the bank with reference to its financial position as on March 31, 2017 and March 31, 2018 and the Risk Assessment Reports pertaining to it. The regulator also carried out an examination of the correspondence with the bank regarding payment of remuneration to its employees in the form of commission to arrive at its decision.
A show-cause notice to the bank was issued, asking it to prove why the penalty for contravention of the provisions of the Act and specific directions issued by RBI should not be imposed.
However, after considering its replies, RBI came to the conclusion that the charges were substantiated and warranted the imposition of monetary penalty.
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