New Delhi, February 18: With the data of RBI imposing penalties on the banks against regulatory violations coming to light and Union Finance Minister Arun Jaitley heading the customary post-budget meeting of the central board of the Reserve Bank on Monday, speculations are ripe that the Union Ministry might consider for lesser and strong banks in the coming times.

Addressing to the press after the post-budget meeting of the central board of the Reserve Bank, Jaitley stated on Monday, “I think India needs fewer and megabanks which are strong because in every sense from borrowing rates to optimum utilisation the economies of scale as far as the banking sector is concerned are of great help.” Adding on, he said, “Year after year, our experience of the last 5 years has been that there has been a reasonably high growth as far as revenues are concerned.” RBI Imposes Monetary Penalty on SBI, Bank of Baroda, Corporation Bank and Union Bank of India For Non-Compliance. 

The Union Minister was expressing his views on fiscal consolidations roadmap for which the meeting was called, with the government expects Rs 28,000 crore from the RBI as interim dividend for 2018-19 based on the financial position of the central bank.

Expressing his opinion on the minutes of the meeting, the newly-appointed RBI Governor Shaktikanta Das said, “The ball lies in the court of the banks to implement and restructure the loans of the eligible MSMEs as per the rules and guidelines are given in the MSME package announced on 01 January 2019.”

Earlier, a report by Bloomberg had stated that the RBI in the last four years had imposed penalties on banks against regulatory violations which increased to Rs 110.34 crore in 2018. The penalties have risen substantially over the past two years, with the setup of dedicated enforcement division to act against such lapses. New Regulations for RBI? Narendra Modi Government Set to Change Functioning of RBI, Say Reports.

According to the report, the RBI in April 2017, had set up an internal Enforcement Department to oversee regulatory compliance and violations by banks, non-bank finance companies and other entities. It states that in the last two years, the internal ED has worked extensively and due to this 128 penalties were imposed against financial institutions of all types, resulting in penal collections around Rs 147.3 crore.

Here are some Details:

Year Number of Violations Penalty Collection (Rs in Crore)
2016 13 1.21
2017 38 39.60
2018 73 110.34
2019 27 25.00 (Penalties imposed till Feb 15, 2019)

Source: RBI

With the penalties in place and the Union government mulling consolidating the fiscal deficit, the RBI’s internal ED has imposed penalties mainly on financial institutions for violating regulations on Know-Your-Customer norm, followed by guidelines of reporting, classifying frauds and end use-of-funds.

The department had imposed 11 penalties each on different institutions for falling foul on the guidelines on restructuring accounts and on inter-bank information exchange protocols. Also, ten penalties were imposed for violating anti-money laundering regulations. Adding on, the RBI’s interim ED has imposed 17 penalties on urban cooperative banks for violating rules on giving loans to the directors of the bank and their relatives.

(The above story first appeared on LatestLY on Feb 18, 2019 02:31 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).