After the Reserve Bank of India fined ICICI Bank Rs 58.9 crore for violating norms, the lender clarified that it has sold less than 5% of securities from its held-to-maturity bonds portfolio in 2017-’18.
The central bank had said that ICICI Bank failed to abide by rules of sale of bonds and imposed a penalty for non-compliance with directions.
The bonds in the held-to-maturity category are not supposed to be used for trading purposes. At least 20% of a bank’s deposits are held in the form of such bonds, which helps it stay solvent. A bank is mandated to make a disclosure of any sale in the held-to-maturity investments in excess of 5%.
“ICICI Bank gives utmost importance to regulatory compliance and ensuring compliance with all directives, guidelines and observations by RBI,” it said in a clarification. “As per RBI guidelines, the bank had disclosed in its annual report for financial year 2017 that it had sold more than 5% of investments categorised as held-to-maturity. 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.”
The lender said it had continued with the sales from held-to-maturity category for a few weeks during the quarter that ended on March 31, 2017 “due to a genuine misunderstanding on the timing of the applicability of RBI’s direction in this matter”, The Economic Times reported.
This is the highest penalty the RBI has imposed on a bank for a single incident, according to The Times of India.
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