Mumbai (Maharashtra) [India], December 28 : The Reserve Bank of India (RBI) on Thursday issued an order imposing a monetary penalty of Rs 2 lakh on Gujarat-based Sardargunj Mercantile Co-operative Bank Limited in Patan, for non-compliance with the directions issued by the central bank on 'Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)'.
The central bank said that the 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.
"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," RBI said.
RBI also said that the statutory inspection of the bank conducted by it with reference to its financial position as of March 31, 2022, and examination of the Inspection Report, Risk Assessment Report and all correspondence related revealed that the bank had breached the prudential inter-bank counterparty exposure limit.
RBI further mentioned 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 failure to comply with the said directions.
"After considering the bank's reply to the notice, 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," RBI said.
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