RBI Penalizes SBM Bank (India) With Rs 88.70 Lakh Fine

The Reserve Bank of India (RBI) has imposed a penalty of Rs 88.70 lakh on SBM Bank (India) for non-compliance with specific regulatory norms. This includes licensing conditions and directives related to the Liberalised Remittance Scheme (LRS).

Non-Compliance with Licensing Conditions

The RBI penalized SBM Bank for not adhering to the licensing conditions imposed by the central bank. The bank was found to have engaged business correspondents to establish account-based relationships with customers from certain regions, despite the RBI rejecting this request.

Violation of Liberalised Remittance Scheme (LRS) Directives

SBM Bank processed transactions under the LRS, even after the RBI directed the bank to halt such activities immediately. This non-compliance led to the imposition of the monetary penalty.

Penalty Assessment Process

The RBI issued two separate notices to SBM Bank, requiring it to explain why a penalty should not be imposed for these failures. After reviewing the bank’s replies, additional submissions, and oral submissions made during a personal hearing, the RBI concluded that the charges against SBM Bank were substantiated, justifying the penalty.

Nature of the Penalty

The RBI clarified that the penalty pertains to regulatory compliance deficiencies and does not reflect the validity of transactions or agreements between the bank and its customers. Additionally, this monetary penalty is independent of any other actions the RBI may take against the bank.