The Reserve Bank of India imposed a monetary penalty of Rs 1.30 crore on the State Bank of India on Monday.
The penalty was imposed for non-compliance related to guidelines on loans and advances and the management of intra-group transactions and exposures, according to the RBI.
"This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949," RBI said.
The same has been put in place after taking the bank's financial position, as of March 31, 2021, into consideration.
SBI sanctioned a term loan to a corporation without undertaking due diligence on the viability and bankability of the projects, according to the RBI.
The bank also failed to adhere to the intra-group exposure limit in this case. It did not take into account the intra-day limit that was sanctioned to its group entity for computing this intra-group exposure limit.
The central bank stated that it issued a notice to the SBI, advising it to show cause. Through this, SBI was asked to explain why a penalty should not be imposed on it.
After taking SBI's reply and oral submissions during personal hearings into account, the central bank decided to impose a monetary penalty on the public sector lender for non-compliance with RBI norms.
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