Reserve Bank of India (RBI)
Reserve Bank of India (RBI)
Photo Credit: PTI

The Reserve Bank of India (RBl) has imposed a monetary penalty of Rs 6 lakh and Rs 5 lakh on the Bijnor Urban Co-operative Bank and National Urban Co-operative Bank respectively. The central bank fined these cooperative banks for non-compliance in two separate order.

RBI stated, “This action is based on 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.”

On the penalty on Bijnor Urban Co-operative Bank, RBI stated, “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, taking into account the failure of the bank to adhere to the aforesaid provisions of the Act and directions issued thereunder by RBI.” The inspection report of the bank based on its financial position as on March 31, 2019, revealed that the bank failed to adhere to the provisions related to prohibition on director related loans and issue of performance guarantee.

In the case of National Urban Co-operative Bank, RBI stated the bank “failed to adhere to specific directions issued to it by RBI under Supervisory Action Framework (SAF)”. The inspection report of the bank based on its financial position as on March 31, 2019, revealed, non-adherence/violation of specific directions issued to the bank by RBI under Supervisory Action Framework (SAF).

Based on the same, a Notice was issued to the bank advising it to show cause as to why penalty should not be imposed for violation of the said directions. After the reply of the bank, the penalty was imposed.

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