Mumbai: 

The Reserve Bank of India (RBI) on March 1, imposed a monetary penalty of Rs. 40 lakh on State Bank of India (SBI) for non-compliance of its directions on detection and impounding of counterfeit notes.

The central bank sent a notification, which stated that the action is based on deficiencies in regulatory compliance found at two of the bank’s currency chests.

"This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A (1) (c) read with Section 46(4) (i) of the Banking Regulation Act, 1949," it said.

The regulator had carried out an inspection of currency chests at two branches of the country's largest lender and noticed certain violation, following which a show cause notice was issued in the first week of January. 

The RBI said the penalty seemed warranted and substantiated considering the bank’s reply and oral submissions. 

It clarified that penal action is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Earlier this week, the RBI had imposed monetary penalties on Axis Bank (Rs. 30 million) for violation of non-performing asset classification norms and Indian Overseas Bank (Rs. 20 million) for not complying with the KYC regulations.