New Delhi [India], February 8 : The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 63.30 lakh on Bombay Mercantile Co-operative Bank Ltd, the central bank said on Thursday.
The RBI imposed the penalty by an order on February 6.
The RBI, in an official statement, said that this action is based on a deficiency 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.
The compliance on the review report of Supervisory Action Framework (SAF) dated March 31, 2021, and March 31, 2022, submitted by the bank revealed that it had offered interest rates on deposits for various durations higher than that offered by SBI in non-compliance with the SAF directions, the RBI said.
"The statutory inspections of the bank conducted by RBI with reference to its financial position as on March 31, 2021 and March 31, 2022, and examination of the Risk Assessment Reports, Inspection Reports and all correspondence related thereto revealed that the bank had sanctioned and disbursed loans to nominal members exceeding the regulatory ceiling of Rs 1.00 lakh, sanctioned and disbursed gold loans with bullet repayment option, exceeding the regulatory ceiling of Rs 2.00 lakh, and recovered charges for activation of inoperative accounts, claiming it to be reimbursement of expenses for such activation," it said.
The central bank further said that consequently, a notice was issued to the bank advising it to show cause as to why a penalty should not be imposed on it for non-compliance with the RBI directions.
"After considering the bank's reply to the notice, the additional submissions made by it and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank," it added.
This penalty has been imposed in the exercise of powers conferred on RBI under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor