RBI asks SBM Bank (India) to stop transactions under LRS

The Reserve Bank on Monday asked SBM Bank (India) Ltd to stop with immediate effect all transactions under the Liberalised Remittance Scheme (LRS) till further orders.

In December 2018, the RBI had sanctioned the Scheme of amalgamation of the entire undertaking of SBM Bank (Mauritius) Limited, India with SBM Bank (India) Limited which was granted licence to carry on the business of banking in India through a wholly-owned subsidiary.

”The Reserve Bank of India has today (January 23, 2023), in exercise of its powers under sections 35A and 36(1)(a) of the Banking Regulation Act, 1949, directed SBM Bank (India) Ltd to stop, with immediate effect, all transactions under Liberalised Remittance Scheme (LRS) till further orders,” the central bank said in a statement.

This action, the RBI added, is based on certain material supervisory concerns observed in the bank.

Under the Liberalised Remittance Scheme, Indian residents, including minors, are allowed to freely remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.

Meanwhile, the RBI has imposed a penalty of Rs 26 lakh on Nutan Nagarik Sahakari Bank, Ahmedabad for non-compliance with the directions issued by it on ‘Co-operative Bank-Interest rate on deposits’ and ‘Guidelines for issue of ATM-cum-Debit cards by UCBs’.

A penalty of Rs 1.5 lakh has also been imposed on Samarth Sahakari Bank, Solapur for contravention of certain norms.