India’s largest public lender the State Bank of India (SBI) has been found flouting several rules in its attempt to cover up non-performing assets (NPAs), according to the RBI’s annual inspection report.
The SBI, among several banks from 2012- 15, was found to be flouting anti-money laundering rules, engaging in ‘evergreening’ of loans, suppression of data and sidestepping know your customer (KYC) norms, said Reserve Bank of India’s report, as stated by Moneylife.
Access to the RBI report was finally granted to Right to Information (RTI) activist Girish Mittal on the direction of the Supreme Court. The central bank had denied access to the reports on multiple occasions, citing its fiduciary relationship with the banks.
Under the Banking Regulation Act, 1949, Section 35, the RBI is empowered to undertake an annual inspection of all commercial banks.
The central bank report found several flaws in SBI’s operation like improper credit needs assessment, lack of credit surveillance, the shortfall in loan security as advised, and non-enforcement of security given.
Deficiencies in the management quality and overall functioning of the bank were highlighted by the Risk Assessment Reports year after year.
(With Agency inputs)
