Several Banks face RBI Penalty for violating Regulatory Requirements

The Reserve Bank of India (RBI) has issued rulings/orders imposing financial/monetary penalties in the case of several banks, for violating or failing to comply with the guidelines/requirements prescribed under the Banking Regulation Act of 1949, from time to time.

It may be noted that the imposition of monetary penalties on banks is based on shortcomings in regulatory compliance and is not meant to call into question the legitimacy of any transaction or agreement entered into by them with their clients. Further, such rulings/orders have been issued for varying amounts depending on the extent of the violations and the response of the relevant bank to the show cause notice (SCN) issued by the RBI, on a case-by-case basis.

Several Banks face RBI Penalty for violating Regulatory Requirements

The banks that have recently been punished by RBI rulings/orders are listed below, along with case summaries:

RBI Press Release dt. 12/12/2022: The Vaidyanath Urban Co-operative Bank Limited, Parli Vaijnath, Beed >> Penalty Rs. 2.5 Lac

RBI has imposed a monetary penalty of Rs. 2.5 lac on The Vaidyanath Urban Co-operative Bank Limited, Parli Vaijnath, Beed, Maharashtra, in view of the irregularities observed in the Inspection Report on the Financial Statements as on March 31, 2020. The bank has violated or failed to comply with the RBI’s KYC regulations by failing to update customers’ KYC at the required intervals and periodically review how the customer’s accounts are classified for risk.

RBI Press Release dt. 12/12/2022: Jila Sahakari Kendriya Bank Maryadit, Bilaspur >> Penalty Rs. 50,000

RBI has imposed a monetary penalty of Rs. 50,000 on Jila Sahakari Kendriya Bank Maryadit, Bilaspur, Chattisgarh, in view of the irregularities observed in the Inspection Report by NABARD on the Financial Statements as on March 31, 2021. The bank has delayed submission of Statutory/OSS returns in contravention of/non-compliance with the provisions of the Banking Regulations Act, 1949 and the directions issued by the NABARD.

RBI Press Release dt. 12/12/2022: Jila Sahakari Kendriya Bank Maryadit, Shahdol >> Penalty Rs. 50,000

RBI has imposed a monetary penalty of Rs. 50,000 on Jila Sahakari Kendriya Bank Maryadit, Shahdol MP, in view of the irregularities observed in the Inspection Report by NABARD on the Financial Statements as on March 31, 2021. The bank has delayed submission of OSS returns in contravention of/non-compliance with the provisions of the Banking Regulations Act, 1949 and the directions issued by the NABARD.

RBI Press Release dt. 12/12/2022: Wai Urban Co-operative Bank Ltd., Satara >> Penalty Rs. 2 lacs

RBI has imposed a monetary penalty of Rs. 2 lac on Wai Urban Co-operative Bank Ltd., Satara, in view of the irregularities observed in the Inspection Report on the Financial Statements as on March 31, 2021. The bank has failed to classify certain loan accounts as non-performing assets (NPA) in accordance with the IRAC norms.

RBI Press Release dt. 05/12/2022: Bharat Cooperative Bank Limited, Bengaluru >> Penalty Rs. 5 lac

RBI has imposed a monetary penalty of Rs 5 lacs on The Bharat Co-operative Bank Limited, Bengaluru, Karnataka in view of the irregularities observed in the Inspection Reports on the Financial Statements as on March 31, 2020 and 2021. The bank’s investment in commercial paper breached the prudential individual exposure limit of 15% of capital funds.

RBI Press Release dt. 02/12/2022: Arunachal Pradesh Rural Bank >> Penalty Rs. 42 lac

RBI has imposed a monetary penalty of Rs 42 lacs on Arunachal Pradesh Rural Bank in view of the irregularities observed in the Inspection Reports by the NABARD on the Financial Statements of the Bank as on March 31, 2019 and 2020. The bank has breached the requirements relating to single investment exposure limits and the IRAC norms on NPA classification in the case of certain term loans and credit facilities.

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