RBI imposes monetary penalty on SBI and Jana Small Finance Bank: These actions are based on deficiencies in statutory compliance
FinTech BizNews Service
Mumbai, May 10, 2025: The Reserve Bank of India (RBI) has, by separate orders in May 2025; imposed monetary penalties on 2 banks. The RBI has penalized State Bank of India (Rs1,72,80,000); and Jana Small Finance Bank (Rs 1Cr) . These actions against both these 2 entities are based on deficiencies in regulatory compliance.
1 The Reserve Bank of India (RBI) has, by an order dated April 29, 2025, imposed a monetary penalty of Rs1,72,80,000 (Rupees One Crore Seventy Two Lakh Eighty Thousand only) on State Bank of India (the bank) for non-compliance with certain directions issued by RBI on ‘Loans and Advances- Statutory and Other Restrictions’, ‘Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’ and ‘Opening of Current Accounts by Banks - Need for Discipline’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.
The Statutory Inspection for Supervisory Evaluation (ISE 2023) of the bank was conducted by RBI with reference to its financial position as on March 31, 2023. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.
After considering the bank’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found, inter alia, that the following charges against the bank were sustained, warranting imposition of monetary penalty:
The bank extended a bridge loan to an entity against amounts receivable from the Central / State Government by way of subsidy / reimbursement;
The bank failed to (i) credit (shadow reversal) the amount involved in unauthorised electronic transactions to certain customer accounts within 10 working days from the date of notification by the customer and (ii) compensate certain customers within 90 days from the date of receipt of the complaint;
The bank opened / maintained certain current accounts in contravention of regulatory requirements.
The 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. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
2 The Reserve Bank of India (RBI) has, by an order dated May 07, 2025, imposed a monetary penalty of Rs1.00 crore (Rupees One Crore only) on Jana Small Finance Bank Limited (the bank) for contravention of provision of Section 12B(5) of the Banking Regulation Act, 1949 (BR Act). This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the BR Act.
The bank had raised paid-up share capital through issue / allotment of Compulsory Convertible Preference Shares (CCPS) to certain persons. This was examined vis-à-vis the requirement under Section 12B(5) of the BR Act and a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the statutory provision.
After considering the bank’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found that the following charge against the bank was sustained, warranting imposition of monetary penalty:
The bank issued / allotted CCPS to certain persons, which taken along with equity share capital held by them, made such persons to hold more than permitted percentage of the paid-up share capital of the bank. It was not ensured that such persons have obtained previous approval of RBI as required under Section 12B(1) of the BR Act.
This action is based on deficiencies in statutory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
