The country’s biggest private bank and the third biggest overall, have been penalized to pay a fine worth INR 58.9 crore by Reserve Bank of India, in a rare move, for its failure to comply with the rules on sale of bonds in the held to maturity category.
On Thursday RBI gave a statement that it has imposed on ICICI Bank Limited a monetary penalty of INR 589 million through an order passed on March 26th, 2018, as it failed to adhere to the directions issued by the Reserve Bank of India on direct sale of securities from its HTM portfolio and specified disclosure in this regard. RBI has the power to take into account the matters of failure by the banks to comply with the guidelines issued by RBI.
It is the first instance that a bank is being charged with fine of this quantum for such non-compliance. This matter came up a day after ICICI Bank clarified its stance on its loan exposure to Videocon Group and conflict of loan interest relating to loans to the bank’s CEO and MD Chanda Kochhar’s husband’s firm NuPower Renewables.
RBI further said that 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 with its customer by the bank. But the officials did not explain how ICICI bank failed to comply with norms.
At present RBI allows banks to sell securities from HTM subject to certain limits and disclosure rules, and the banks need to disclose the number of securities they keep under the HTM segment under which papers are held until maturity and cannot be used for intra-day trading.
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