Home / Industry / Banking /  RBI imposes penalty on Zoroastrian, Indian Mercantile and 5 other co-op banks
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The Reserve Bank of India on Monday imposed penalties on  three cooperative banks. The central bank imposed penalty on Zoroastrian Co-operative Bank, Indian Mercantile Co-operative Bank, Lucknow and Bharat Co-operative Bank, Mumbai.

The central bank has imposed a penalty of 1.25 crore on Zoroastrian Co-operative Bank, Mumbai for non-compliance with certain directions, including one related to discounting of bills.

In a release, the RBI said the bank had failed to comply with its directions on 'Discounting of Bills by UCBs – Restricted Letters of Credit (LC)' and the provisions of the Rules, as it discounted accommodation bills under LCs without establishing the genuineness of underlying transactions/ documents and failed to preserve records in good order for a period of eight years.

In a separate release, the RBI said a penalty of 20 lakh has been imposed on Indian Mercantile Co-operative Bank, Lucknow for non-compliance with the certain norms related classification of non-performing assets.

In the release RBI said that penalty was “for non-compliance with the directions issued by RBI on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters’ (IRAC norms). This penalty has been imposed in exercise of powers vested in RBI conferred under section 47A(1)(c) read with sections 46(4)(i) and 56 of Banking Regulation Act, 1949 (BR Act)."

While, a penalty of 50 lakhs was imposed on Bharat Co-operative Bank, Mumbai for non-compliance on on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters’

The central bank also imposed penalties on five other cooperative banks.

The RBI, however, added that penalties are based on deficiency in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers. 

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