Case Brief
What Happened
By an order dated September 21, 2023, RBI imposed a monetary penalty of Rs 1.30 crore on State Bank of India. The penalty was levied for non-compliance with RBI directions relating to loans and advances and management of intra-group transactions and exposures. RBI said the bank sanctioned a term loan to a corporation as a substitute for budgetary resources for certain projects without adequate due diligence on viability and bankability, and the loan repayment/servicing was made out of budgetary resources. RBI also found that the bank failed to adhere to the intra-group exposure limit because it did not consider an intra-day limit sanctioned to its group entity while computing exposure. The action was taken under the Banking Regulation Act, 1949, after show-cause proceedings and consideration of the bank’s reply and submissions.