Reserve Bank of India (RBI) imposed a monetary penalty of Rs 3 crore on private lender ICICI Bank. This fine was imposed for violation of certain directions issued by RBI on ‘prudential norms for classification, valuation and operation of investment portfolio by banks’
The regulator stated, "This penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with section 46 (4) (i) of the Banking Regulation Act, 1949 (the Act). This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers."
The banking regulator found that the bank shifted securities from one category to another which was against RBI regulations.
In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the directions issued by RBI.
The regulator imposed the penalty after considering the bank’s reply to the notice, oral submissions made in the personal hearing and examination of additional submissions made by it. Post this, RBI came to the conclusion that ICICI Bank should be charged for non-compliance with RBI directions.
Meanwhile, the bank in its filing stated, "The Bank had transferred two separate categories of securities on two different dates from HTM to AFS in April and May of 2017, which it believed was permissible as per Master Circular on Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks’ dated July 01, 2015." The bank added the regulator has held that the shifting of securities the second time in May 2017 without explicit permission was in contravention of RBI directions.