Recorded RBI impact
Fine: Rs 10.0 L
Monetary penalty · Fresh imposition
Published by RBI
25 Apr 2007
Case Brief
The Reserve Bank of India imposed a penalty of Rs. 10 lakh on SBI Commercial and International Bank Ltd. under Section 47A(1)(b) of the Banking Regulation Act, 1949. The penalty was split into two Rs. 5 lakh violations: non-adherence to KYC norms while opening and operating IPO-related accounts, including failure to complete KYC for existing accounts, and failure of the bank's internal control systems to detect the lapses, along with furnishing wrong compliance to RBI despite advice to conduct an internal review of IPO funding.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(b) of the Banking Regulation Act, 1949. The bank was found to have violated KYC instructions while opening and operating IPO-related accounts and failed to complete KYC procedures for existing accounts. RBI further found that the bank's internal control systems failed to detect these lapses, and despite RBI advice to conduct an internal review of IPO funding, the bank did not detect the issues and submitted incorrect compliance to RBI.
Operating Impact
The bank must absorb the monetary penalty and address the compliance weaknesses identified by RBI, especially in KYC procedures, internal controls, and regulatory reporting. There is no stated operational restriction, but the findings indicate continued supervisory scrutiny of the bank's IPO funding and account-opening processes.
Regulatory Basis
- Section 47A (1) (b) of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 10.0 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Bank