The RBI performed a statutory inspection of the bank and discovered that it was not in conformity with RBI regulations.
RBI stated that it had sanctioned loans and advances to companies whose board of directors includes members of rival banks’ boards of directors without such sanctions being granted at the management committee level.
The bank was also sent with a notice from the RBI, instructing it to show cause why a penalty should not be imposed for non-compliance with the rules.
RBI concluded that the charge of non-compliance with norms was proven and warranted imposition of monetary penalty after reviewing the bank’s response to the notice, oral representations made during the personal hearing, and other submissions made by the bank.
