India’s central bank, Reserve Bank of India (RBI) has imposed a penalty of INR589m ($9.06m) on ICICI Bank for violating the directives on direct sale of securities from its held-to-maturity (HTM) portfolio.
In a statement, RBI said that the monetary penalty has been awarded 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 ICICI bank to comply with the necessary guidelines.
It also said that the penalty was imposed on the basis of deficiencies in regulatory compliance and it is not intended “to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers”.
Under the RBI guidelines, all banks are required to segregate the investments into three categories, namely Held For Trading (HFT), Available For Sale (AFS) and Held to Maturity (HTM).
All securities which will be held till maturity can also be classified under HTM.
The banks are required to divulge in their annual financial statements the market value of HTM investments when the value of sales of securities from HTM category exceeds 5%.
In the annual report FY2017, the bank stated that it sold more than 5% of investments categorised as HTM, but, it did not made specified additional disclosures at that time.