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Press Release

The Reserve Bank of India (RBI) has imposed, by an order dated 15-07-2019, monetary penalty of 70 million on State Bank of India (the bank) for non-compliance with the directions issued by RBI on (i) Income Recognition and Asset Classification (IRAC) norms (ii) code of conduct for opening and operating current accounts and reporting of data on Central Repository of Information on Large Credits (CRILC), and (iii) fraud risk management and classification and reporting of frauds. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A (1)(c) read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949 (the Act).

This action is based on 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 statutory inspection of the bank with reference to its financial position as on 31-03-2017 revealed, inter alia, non-compliance with directions issued by RBI on IRAC norms, sharing of information about customers with other banks, reporting of data on CRILC, fraud risk management, and classification and reporting of frauds. Based on the inspection report and other relevant documents, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with directions issued by RBI. After considering the bank’s reply and oral submissions made in the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.

[Press Release dt. 15-07-2019]

Reserve Bank of India

Case BriefsHigh Courts

Kerala High Court: The Division Bench comprising of Hrishikesh Roy, C.J. and A.K. Jayasankaran Nambiar, J. dismissed a PIL for being frivolous in nature and further explaining the concept and seriousness of misuse of public interest litigations by citing two prominent Supreme Court Judgments, i.e. State of Uttaranchal v. Balwant Singh Chaufal, (2010) 3 SCC 402 and Tehseen Poonawalla v. Union of India, (2018) 6 SCC 72.

Now, coming onto the issue raised by the petitioner, the public interest litigation was based on a newspaper report which alleged that there was security lapse in the conduct of banking operation by SBI. The stated petition was filed against State Bank of India and their General Manager. Petitioner basing his allegation on the newspaper report further stated that “there are serious lapses by the Bank and this has resulted in customer data leakage and disruption of online services.” Petitioner sought investigation and further direction to General Manager, SBI to remit Rs 5 crores to Kerala State Legal Services Authority.

Respondents denied the allegations and asserted that customers details are fully secure in the servers maintained by SBI, and there are enough inbuilt safeguards in the conveyance of data, for the usual banking transactions.

Therefore, the High Court noted and further stated that the PIL mechanism is being misutilised by the litigant since the material has not been verified on the basis of which the public interest litigation was filed.

The Court cited the case of State of Uttaranchal v. Balwant Singh, (2010) 3 SCC 402, in which various guidelines were issued in order to preserve the purity and sanctity of the Public Interest Litigations. Another case cited was of Tehseen Poonawalla v. Union of India, (2018) 6 SCC 72, where the Supreme Court once again addressed the issue and stated that:

“Misuse of public interest litigation is a serious matter of concern for the judicial process. Frivolous or motivated petitions, ostensibly invoking the public interests detract from time and attention which courts must devote to genuine causes.”

High Court dismissed the petition with costs by explaining the severity of the time of the Court and seriousness of the judicial process. [Shaheer Ali v. SBI, 2019 SCC OnLine Ker 2048, decided on 25-06-2019]

Case BriefsHigh Courts

Allahabad High Court: The Bench of Pankaj Mithal and Saumitra Dayal Singh, JJ. dismissed a petition filed against the order which rejected the candidature of the petitioner for the U.P. Higher Judicial Service Examination-2018 on the ground that he was in full-time employment and thus did not have the required experience for the candidature.

The facts of the case were that in the petitioner had enrolled himself as an advocate with the Bar Council of Delhi in 2010. Thereafter he got in full-time employment as Law Officer with the State Bank of India and the Punjab National Bank respectively in 2014. However, he never surrendered his license to practice and it was never suspended despite the information of employment to the Bar Council. During his employment with the SBI, he appeared in courts and provided legal assistance to the senior counsel of the Bank at Allahabad and Lucknow. The contention arose when he appeared for the preliminary examination for the U.P. HJS in 2018 and his name was rejected as indicated due to the fact that he was in ’employment’. He made a representation against this which was rejected as the Selection Committee opined that he was in permanent employment as Deputy Manager (Law) in SBI from 2014 onwards. Accordingly, he was not an advocate of the standing required in Rule 5(c) of the U.P. Higher Judicial Service Rules, 1975. The Counsel for the petitioner, Tarun Verma, submitted that despite his full-time employment he continued to practice law by appearing before the courts thus he was eligible for appointment in the U.P. HJS.

The Court to adjudicate this looked into Article 233(2) of the Constitution which in unequivocal term provides that a person not already in service shall be eligible for appointment as District Judge if he has been in practice as an advocate or pleader for not less than 7 years thus making 7 years of practice a mandate. After the above constitutional provision came the Bar Council of India Rules framed under Section 49 of the Advocates Act, 1961 which completely prohibits an advocate from taking any full-time employment during his continuance of the practice. Further, Rule 5(c) of The U.P. HJS Rules, 1975 stated that the eligibility for direct recruitment to the U.P. HJS is from amongst the advocates of not less than 7 years standing meaning thereby that a minimum of 7 years standing as an Advocate is a sine-qua-non for selection/appointment in U.P. HJS through direct recruitment. The Court thus held that it was elementary for holding the post of DJ/U.P. HJS to have atleast 7 years of actual standing as an advocate and not the theoretic knowledge of the law as in full-time employment. Further, it was stated that Rule 49 of the Bar Council of India Rules created a legal fiction to the effect that a person duly enrolled as an advocate ceases to be one as soon as he takes full-time employment on salary even if continues to occasionally appear in law Court. This legal fiction has to be recognized as real. The petition was thus dismissed. [Shiv Kumar Pankha v. High Court of Allahabad, WRIT – A No. – 25580 of 2018, Order dated 05-04-2019]