RBI Fines ICICI Bank Rs 58.9 Crore, In Highest Penalty Imposed On Bank For Single Incident

| March 29 , 2018 , 15:42 IST

The Reserve Bank of India (RBI) has fined ICICI Bank Rs 58.9 crore for violating norms regarding the sale of government securities from the held-to-maturity category of its bonds portfolio, RBI said on Thursday.

The penalty to ICICI bank marks the highest ever penalty imposed by the RBI on a bank for a single incident. Subsequently, the shares of ICICI bank fell nearly 2 percent in early morning trade on Thursday in the Bombay Stock Exchange.

According to the RBI press release, it has imposed the penalty on ICICI Bank Limited for “non-compliance with directions issued by RBI on direct sale of securities from its HTM portfolio and specified disclosure in this regard”.

ALSO READ: ICICI Bank Q2 Net Falls Rs 1,044 Cr

The statement continued, “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.”

As per RBI guidelines, banks are required to split their holdings of government securities into `held-to-maturity’ (HTM) and `available-for-sale’ (AFS) categories. If the market value of the HTM bonds fall, banks don't need to make provisions. However, if the market value of the AFS bonds falls, banks are required to make provisions for losses in the market value of the bonds since those are their trading or liquid portfolio.

The RBI did not further elaborate on how ICICI failed to comply with its norms which resulted in its penalisation.