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The Bharat Cooperative Bank Limited, Bengaluru, has been fined 5 lakh by the Reserve Bank of India (RBI) on December 5 for violating several regulations. For non-adherence / violation of directions issued under Exposure Norms and Statutory / Other Restrictions – UCBs, the penalty has been levied said RBI.

RBI said in a notice that “This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949 (AACS), taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI."

Highlighting the background of the penalty action made on Bharat Cooperative Bank, RBI said the inspection reports of the bank based on its financial position as on March 31, 2020 and March 31, 2021, revealed, inter alia, that the bank’s investment in commercial paper breached the prudential individual exposure limit of 15% of capital funds.

After considering the bank’s reply and oral submissions during the personal hearing, RBI came to the conclusion that the aforesaid charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty, said the central bank.

On 2nd December 2022, RBI also imposed a monetary penalty of 42 lakhs on Arunachal Pradesh 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)’. RBI said in a notice that “This penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47A(1)(c) read with section 46(4)(i) and Section 51(1) of the Banking Regulation Act, 1949. This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers."

Highlighting the background of the penalty action made on Arunachal Pradesh Rural Bank, RBI said in a note that “The statutory inspection of the bank was conducted by NABARD with reference to its financial position as on March 31, 2019 and March 31, 2020, and the examination of the Inspection Reports and all related correspondences pertaining to the same revealed, inter alia, that the bank failed to comply with the aforesaid RBI directions to the extent it did not (i) adhere to exposure limits for single investment and (ii) classify certain term loans and credit facilities as non-performing assets in accordance with the IRAC norms. In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions, as stated therein." After this, the central bank came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty, to the extent of non-compliance with such directions.

ABOUT THE AUTHOR

Vipul Das

Vipul Das is a Digital Business Content Producer at Livemint. He previously worked for Goodreturns.in (OneIndia News) and has over 5 years of expertise in the finance and business sector. Stocks, mutual funds, personal finance, tax, and banking are among his specialties, and he is a professional in industry research and business reporting. He received his bachelor's degree from Dr. CV Raman University and also have completed Diploma in Journalism and Mass Communication (DJMC).
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