The Reserve Bank of India (RBI) on Monday imposed monetary penalty on ICICI Bank and YES Bank for violating various regulatory norms, according to a press release.
ICICI Bank was fined Rs 1 crore for sanctioning a term loan to certain entities in lieu of or to substitute budgetary resources envisaged for certain projects.
The bank did not conduct due-diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were sufficient to take care of the debt servicing obligations.
Further, the repayment of these loans were made out of budgetary resources and the bank did not ensure that the funding proposals were for specific monitorable projects.
“The action is 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,” the central bank said.
The Reserve Bank of India (RBI) on Monday imposed monetary penalty on ICICI Bank and YES Bank for violating various regulatory norms, according to a press release.
ICICI Bank was fined Rs 1 crore for sanctioning a term loan to certain entities in lieu of or to substitute budgetary resources envisaged for certain projects. The bank did not conduct due-diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were sufficient to take care of the debt servicing obligations. Further, the repayment of these loans were made out of budgetary resources and the bank did not ensure that the funding proposals were for specific monitorable projects.
“The action is 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,” the central bank said.
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Separately, YES Bank was fined Rs 91 lakh by the RBI for levying charges for non-maintenance of minimum balance in certain savings accounts having insufficient, zero balance and for opening and operating certain internal accounts in the name of its customers for unauthorized purposes like parking funds and routing customer transactions.
“After considering the bank’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI found, inter alia, that the following charges against the bank were sustained, warranting imposition of monetary penalty,” the regulator said.
