The Reserve Bank of India (RBI) has imposed a ₹70m monetary penalty on the State Bank of India for failing to comply with the standards set up by the central banking institution.
The fine comes after the bank was found to be breaching the rules and norms regarding asset classification, fraud risk management and in the reporting of fraud.
The central banking institution accused the State Bank of India of having failed to live up to the norms and code of conduct issued by RBI on income recognition and asset classification (IRAC). These rules outline the approved way of opening and operating accounts and reporting data to RBI’s central repository of information on large credits. Moreover, these rules also lay out the proper way to manage fraud risk and the classification and reporting of fraud.
The RBI issued the bank after a statutory inspection of the State Bank of India in March 2017 revealed the bank had failed to live up to the IRAC norms of sharing customer data with other banks, reporting of data on CRILC, fraud risk management, and classification and reporting of frauds. The finding led to RBI issuing a notice to the State Bank of India to explain why it had failed to live up to the standards set out by the central banking institution.
While the State bank of India replied, the RBI was remained unsatisfied by the answers given by the bank. The result was that the central banking institution issuing the ₹70m fine.
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