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SBI California ordered to clean up US operations
Wednesday May 08, 2013 09:47:26 PM,
Arun Kumar, IANS
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Washington: The California-based subsidiary of State
Bank of India (SBI) has agreed to take a series of steps to
improve its banking practices related to bad loans following a
review by US regulators.
The largest Indian bank consented March 6 to the orders of the
federal and state regulators "without admitting or denying any
charges of unsafe or unsound banking practices relating to the
June 18, 2012, examination".
The Federal Deposit Insurance Corporation (FDIC) provides deposit
insurance and examines certain financial institutions for safety
and soundness, while the California Department of Financial
Institutions (CDFI) regulates the state's banking system.
The March 20 consent order accepting the SBI subsidiary's plea
sets deadlines ranging between 30 days and 120 days from that date
for achieving the targets set out by the regulators.
The 17-page order, among other things, requires the bank to have
and retain qualified management and obtain within 90 days an
independent study to ensure it "is staffed by qualified
individuals commensurate with its size and risk profile to ensure
the safe and sound operation of the bank".
The order also requires the bank to file with the FDIC "Reports of
Condition and Income which accurately reflect the financial
condition of the Bank" including "any adjustment in the Bank's
books made necessary or appropriate as a consequence of any FDIC
and/or CDFI examination of the Bank".
The regulators have also ordered the bank not to "establish any
new branches or other offices of the Bank or enter into any new
lines of business without the prior written consent of the
Regional Director and the Commissioner".
The bank is also required to eliminate from its books, by
"charge-off" and "collection" (and not write-offs) all assets that
the bank has classified as "loss", but have not been previously
collected or charged off.
"Elimination of these assets through proceeds of other loans made
by the bank is not considered collection for the purpose of this
paragraph," the order said.
"The bank is to develop a written plan, approved by the board for
systematically reducing the level of non-performing assets and/or
assets listed on the bank's watch list to an acceptable level," it
added.
"Violation of any provisions of this order will be deemed to be
conducting business in an unsafe and unsound manner, and will
subject the bank to further regulatory enforcement action," said
the order, signed by Kathy L. Moe, deputy regional director (Risk
Management) at FDIC, and Scott D. Cameron, chief examiner of the
CDFI.
(Arun Kumar can be contacted at arun.kumar@ians.in)
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