RBI Slaps Penalties on SBI and Jana Small Finance Bank for Regulatory Lapses

In a strong regulatory move, the Reserve Bank of India (RBI) has imposed monetary penalties on two banks — State Bank of India (SBI) and Jana Small Finance Bank — for deficiencies in compliance with banking norms. The action underlines the central bank’s strict approach toward ensuring discipline and customer protection in India’s financial sector.

Why in News?

The RBI announced on May 9, 2025, that it has imposed: A penalty of ₹1.72 crore on SBI and A penalty of ₹1 crore on Jana Small Finance Bank. These penalties are for non-compliance with specific directives related to loans, customer liability, and regulatory provisions under the Banking Regulation Act, 1949.

Key Highlights

State Bank of India (SBI)

• Penalty: ₹1,72,80,000

Violations

• Non-compliance with RBI guidelines on Loans and Advances – Statutory and Other Restrictions
• Failure to adhere to norms on Customer Protection – Limiting Liability in Unauthorised Electronic Banking Transactions
• Breach of instructions on Opening of Current Accounts

Jana Small Finance Bank Ltd

• Penalty: ₹1 crore

Violation

• Contravention of provisions under the Banking Regulation Act, 1949

RBI’s Clarification

• The RBI stated that the penalties are not judgments on the validity of any specific banking transaction or agreement.
• The action is strictly to ensure better compliance with regulatory requirements.

Background & Objectives

• RBI’s Supervisory Role: The RBI acts as the regulator of India’s banking sector, enforcing compliance with laws and guidelines to ensure the safety and integrity of the banking system.
• Customer Protection: One major objective is to limit the liability of customers in case of unauthorised electronic transactions, safeguarding user interests.

Banking Discipline

• The RBI has emphasized that discipline in account operations and loan disbursal is essential to maintain the financial system’s credibility.