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RBI imposes penalty on Mizoram Rural Bank, Tripura Gramin Bank for violation of norms

The RBI said monetary penalties were imposed on Mizoram Rural Bank and Tripura Gramin Bank after they failed to categorize certain loan accounts as non-performing in line with the Income Recognition and Asset Classification (IRAC) norms

The RBI further clarified that the actions are based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with its customersPremium
The RBI further clarified that the actions are based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with its customers

The Reserve Bank of India (RBI) on Monday said it has imposed monetary penalties on Mizoram Rural Bank and Tripura Gramin Bank for contravention of various norms.

The central bank imposed a monetary penalty of 5 lakh on Mizoram Rural Bank for contravention of/non-adherence with the directions issued by RBI on ‘Strengthening of Prudential Norms - Provisioning, Asset Classification and Exposure Limit’ and ‘Regional Rural Banks - Income Recognition, Asset Classification and Provisioning Norms - Non-Performing Assets (NPAs)’. 

In a separate release, the Reserve Bank said a penalty of 2 lakh has been imposed on Mizoram Rural Bank for non-compliance with the directions issued by RBI on ‘Strengthening of Prudential Norms - Provisioning, Asset Classification and Exposure Limit’ and ‘Regional Rural Banks - Income Recognition, Asset Classification and Provisioning Norms - Non-Performing Assets (NPAs)’.

According to the release, the penalties were imposed on both the banks after they failed to categorize certain loan accounts as non-performing in line with the Income Recognition and Asset Classification (IRAC) norms.

The RBI release said based on the NABARD findings on financial position of both the banks as on March 31, 2022, notices were issued to them (Mizoram Rural Bank and Tripura Gramin Bank) advising banks to show cause as to why penalty should not be imposed on them for non-compliance with the directions.

After reviewing the bank's response to the notice, additional submissions made and oral submissions made by it during Personal Hearing, RBI came to the conclusion that the afore mentioned charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty.

The RBI further clarified that the actions are based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with its customers.

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Updated: 15 May 2023, 08:03 PM IST
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