Recorded RBI impact
Monetary penalty
Monetary penalty · Fresh imposition
Published by RBI
7 Jul 2021
Case Brief
By orders dated July 06, 2021, RBI imposed monetary penalties on fourteen banks, including Bandhan Bank Ltd., Bank of Baroda, Bank of Maharashtra, Central Bank of India, Credit Suisse AG, Indian Bank, IndusInd Bank Ltd., Karnataka Bank Ltd., Karur Vysya Bank Ltd., Punjab and Sind Bank, South Indian Bank Ltd., State Bank of India, The Jammu & Kashmir Bank Ltd., and Utkarsh Small Finance Bank Ltd. The penalties were imposed for non-compliance with RBI directions on lending to NBFCs, bank finance to NBFCs, loans and advances/statutory and other restrictions, creation of a central repository of large common exposures across banks, CRILC reporting, and operating guidelines for small finance banks, as well as contraventions of Sections 19(2) and 20(1) of the Banking Regulation Act, 1949. RBI stated that the action was based on deficiencies in regulatory compliance and did not pronounce on the validity of transactions or agreements with customers.
Why RBI Acted
RBI imposed monetary penalties on fourteen banks after scrutiny of accounts of companies of a group found that the banks had failed to comply with one or more RBI directions relating to lending to NBFCs, bank finance to NBFCs, loans and advances/statutory and other restrictions, creation of a central repository of large common exposures across banks, CRILC reporting, and operating guidelines for small finance banks, and/or had contravened Sections 19(2) and 20(1) of the Banking Regulation Act, 1949. Show-cause notices were issued, replies and oral submissions were considered, and RBI concluded that the sustained charges warranted penalties under Section 47A(1)(c) read with Sections 46(4)(i) and 51(1) of the Act.
Operating Impact
All fourteen banks must absorb the monetary penalty and address the cited compliance weaknesses. The action has no stated direct effect on customer transactions, but it signals supervisory scrutiny of lending, exposure reporting, and statutory compliance practices.
Regulatory Basis
- Section 19(2) of Banking Regulation Act, 1949
- Section 20 (1) of Banking Regulation Act, 1949
- section 47 A (1) (c) read with sections 46 (4) (i) and 51 (1), of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Monetary penalty
- Order Date
- 6 Jul 2021
- Effective From
- 6 Jul 2021
- Entities Affected
- 14
- Entity Role
- Bulk Member
- Entity Type
- Bank
Related Entities
Entities similar to Credit Suisse AG