New Delhi [India], January 8 : The Reserve Bank of India (RBI) has taken action against The Mehsana Jilla Panchayat Karmachari Co-operative Bank Ltd., based in Mehsana, Gujarat, by imposing a monetary penalty of Rs 3.00 lakh.
According to RBI, the penalty, dated December 13, 2023, has been enforced due to the bank's non-compliance with RBI directives concerning the 'Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)' and violations of Section 26A(2) read with Section 56 of the Banking Regulation Act, 1949 (BR Act).
This monetary penalty is exercised under the authority granted to RBI by the provisions of Section 47A(1)(c) along with Sections 46(4)(i) and 56 of the BR Act.
The penalty stems from identified deficiencies in regulatory compliance, and it is essential to note that this action is not intended to pass judgment on the validity of any transactions or agreements made by the bank with its customers.
The regulatory scrutiny conducted by RBI included a statutory inspection of the bank's financial position as of March 31, 2022.
The examination covered the inspection report, risk assessment report and related correspondence.
The findings revealed that the bank had breached the prudential inter-bank counterparty exposure limit and failed to transfer the eligible amount to the Depositor Education and Awareness Fund.
In response to these deficiencies, RBI issued a notice to the Mehsana Jilla Panchayat Karmachari Co-operative Bank Ltd., directing the bank to show cause as to why a penalty should not be imposed for its non-compliance with the specified directives and provisions of the BR Act.
Following the receipt of the bank's response to the notice and oral submissions made during the personal hearing, RBI concluded that the charges of non-compliance with the aforementioned directives and provisions of the BR Act were substantiated.
Therefore, the imposition of a monetary penalty was deemed warranted by RBI.
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