On May 10, 2025, the State Bank of India was penalised with a fine of 1.73 Crore by the RBI for various charges due to non-compliance with its policies regarding loans, customer protection and account opening regulations under the ‘Banking Regulations Act 1949’.
This shows the fact that the RBI is focused on the country and its civilians, aiming to maintain the rules and regulations put forth by it under any and all circumstances. The largest public sector bank has been levied various charges and was unable to justify their decisions.
Key Highlights & Violations
The following were the violations registered by the RBI:
♦ Non-compliance with RBI guidelines regarding loans and advances – statutory and other restrictions.
♦ Failure to follow RBI regulations on Customer protection – limiting liability of customers in unauthorised electronic banking transfers.
♦ Violation of instructions put forth by the RBI regarding the opening of Current Accounts.
♦ The penalty was imposed under Section 47A(1)(c), in conjunction with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.
Reason for SBI Penalty
The SBI was found guilty for its non-compliance with RBI policies regarding various functions after the inspection occurred on March 31, 2023, which resulted in RBI fining SBI 1.73 Crore rupees.
Following are the accusations against the bank:
• Provided a bridge loan to an entity secured against receivables from the central or state government in the form of subsidies or reimbursements.
• The bank failed to trace back the funds for certain unauthorised electronic transactions within 10 working days of customer notification and failed to compensate affected customers within 90 days of receiving their complaints.
• The bank also failed to follow the regulations regarding the opening and maintenance of certain current accounts.
The shortcomings were noticed by the RBI and a notice was issued, stating the SBI should provide a clarification regarding the non-compliance incident and why they shouldn’t be penalised.
However, through the following appeal, submission and personal hearings, SBI was not able to justify their actions. Therefore, RBI proceeded with a monetary penalty of ₹1,72,80,000.
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FAQs
What is the penalty of the RBI on SBI?
RBI Fined SBI with a 1.73 Crore monetary penalty as a result of the non-compliance of SBI to meet various regulations put forth by SBI.
Which banks were fined by the RBI recently?
Several banks were recently fined by the RBI, including State Bank of India (SBI), ICICI Bank, Bank of Baroda, Axis Bank, Bank of Maharashtra, IDBI Bank, Yes Bank, Deutsche Bank AG, Jana Small Finance Bank, Kotak Mahindra Bank, IDFC First Bank, Punjab National Bank (PNB), Canara Bank, Bank of India, Jammu & Kashmir Bank, and Union Bank of India.
Why does the RBI impose penalties on banks?
RBI imposes penalties on banks if they fail to comply with the norms and regulations put forth by the Reserve Bank of India.
What is the new RBI rule for penalty charges?
The latest RBI rules (effective April 1, 2024) replace “penal interest” with “penal charges” on loans. These charges are now non-compounding (no interest on penalties) and must be reasonable and transparently disclosed. The aim is to curb excessive penalties and promote fair lending practices.