Mumbai: The Reserve Bank of India (RBI) by an order dated November 16 has imposed a monetary penalty of Rs 1 crore on the State Bank of India for contravention of section 19 (2) of the Banking Regulation Act, 1949 (the Act), informed RBI.Also Read - Govt Approves Merger of PMC Bank With Unity Small Finance Bank With Immediate Effect | Read Notification Here

“This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers,” reads the official release. Also Read - SBI Card Third Quarter Net Profits Rise By 56 Per Cent To Rs 386 Crore

As per the press note, the irregularities were identified after a Statutory Inspections for Supervisory Evaluation (ISE) of the bank was conducted by RBI with reference to its financial positions as on March 31, 2018, and March 31, 2019, and the examination of the Risk Assessment Reports, Inspection Report and all related correspondence pertaining to the same, revealed, inter-alia, contravention of section 19 of the Act. Also Read - Budget Glossary 2022: Key Economic Terms Decoded to Understand FM Nirmala Sitharaman's Speech

Section 19 (2) of the Act says that “no banking company shall hold shares in any company, whether as pledgee, mortgagee or absolute owner, of an amount exceeding thirty per cent of the paid-up share capital of that company or thirty per cent of its own paid-up share capital and reserves, whichever is less.”

“After considering the bank’s reply to the notice, oral submissions made during the personal hearing, and additional submissions made by the bank, RBI came to the conclusion that the charge of contravention of the aforesaid provisions of the Act was substantiated and warranted imposition of monetary penalty on the bank, to the extent of contravention of the aforesaid provisions of the act,” read the press note.