The RBI logo
Credit: Reuters File Photo
Mumbai: The Reserve Bank of India (RBI) on Friday said it has imposed a penalty of Rs 88.70 lakh on SBM Bank (India) for non-compliance with certain regulatory norms.
In a statement, the central banks said the penalty has been imposed for non-compliance with licensing conditions imposed by the RBI, and specific directions to stop undertaking Liberalised Remittance Scheme (LRS) transactions with immediate effect.
Two separate notices were 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/conditions.
After considering the bank's reply to the notices, additional submissions made by it, and oral submissions made during the personal hearing, the RBI said it found, inter alia, that the charges against the SBM Bank (India) were sustained warranting imposition of monetary penalty.
The RBI said the bank was engaged business correspondents for establishing account-based relationship with customers from certain regions, despite its request being not acceded to by RBI.
It also processed certain transactions under Liberalised Remittance Scheme, despite RBI directions to stop such transactions with immediate effect.
The RBI, however, added that penalty was based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transactions 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, the central bank added.