ICICI Bank issues clarification after RBI slaps fine of Rs 58.9 crore for treasury violations

A day after India's second largest private lender ICICI Bank gave clean chit to its CEO Chanda Kochhar, the Reserve Bank of India (RBI), in a separate case, imposed a monetary penalty of Rs 58.9 crore on ICICI Bank Ltd for failure to adhere to held-to-maturity (HTM) guidelines.

RBI said the penalty was levied for non-compliance on direct sale of securities from its HTM portfolio. "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, taking into account failure of the bank to adhere to the aforesaid directions/guidelines issued by RBI," the central bank said.

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, the banking regulator said.

Issuing a clarification, the ICICI Bank said: "ICICI Bank had continued with the sales from HTM category for a few weeks during the quarter ended March 31, 2017, due to a genuine misunderstanding on the timing of the applicability of RBI's direction in this matter."

"As per RBI guidelines, the Bank had disclosed in its annual report for FY2017 that it had sold more than 5% of investments categorised as HTM. However, the Bank had not made the specified additional disclosure at that time. The Bank has subsequently been making the specified disclosure as directed by RBI in the audited financial results since the quarter ended June 30, 2017," it added.

"During the current year, i.e., FY2018, the Bank has sold less than 5% of securities from its HTM portfolio. The Bank would like to re-iterate that it continues to give utmost importance to regulatory compliance and endeavors to meet supervisory expectations," the ICICI Bank said in a statement.