RBI slaps penalty on HDFC Bank
The Reserve Bank of India (RBI) has imposed a fine of Rs10 lakh on the private sector lender HDFC Bank for bouncing of SGL, which led to shortage of balance in certain securities in the bank’s CSGL account on November 19, 2020
Mumbai: The Reserve Bank of India (RBI) has imposed a fine of Rs10 lakh on the private sector lender HDFC Bank for bouncing of SGL, which led to shortage of balance in certain securities in the bank's CSGL account on November 19, 2020.
Subsidiary General Ledger (SGL) contains details of all transactions happening in a bank, and a certain threshold of balance should be always present there. According to the notifications issued by RBI, this penalty was imposed on HDFC Bank as they failed to maintain minimum capital required in SGL, which resulted in bouncing of SGL. The bank received the order on December 9 and the disclosure was made on December 10, after market hours. HDFC Bank received the letter from RBI on December 9.
In their notification, RBI said: "A monetary penalty of Rs10 lakh has been imposed on the bank for bouncing of SGL, which lead to shortage of balance in certain securities in the bank's CSGL account on November 19."
Recently, the HDFC Bank's stock valuation declined after RBI announced a halt on the launch of the bank's digital business generating activities planned under its program Digital 2.0 and sourcing of new credit card customers.
HDFC Bank informed analysts that improving the architectural efficiency of its IT systems would take three months while it would take six weeks to automate switchover to disaster recovery system.
Talking to Bizz Buzz, a source at the HDFC Bank said that said it was just a mechanical error while feeding the input, for which the bank will have to pay the price in the form of penalty.