RBI imposes monetary penalty on Sarvodaya Co-operative bank

By Administrator_ India

Capital Sands

The Reserve Bank of India (RBI)  on July 27 imposed a monetary penalty of Rs 1 lakh on Sarvodaya Commercial Co-operative Bank for non-compliance with directions issued by the RBI on ‘Loans and advances to directors, relatives and firms/concerns in which they are interested, the RBI said in a release.

This is the latest instance of the RBI clamping down on erring cooperative banks.

“This penalty has been imposed in exercise of powers vested in the RBI under the provisions of section 47 A (1) (c) read with sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949,” the RBI said.

The regulator clarified that 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.

The statutory inspection of the bank conducted by the RBI revealed non-compliance with aforesaid directions issued by the RBI, the central bank said.

Subsequently, a notice was issued to the bank advising it to show cause as to why a penalty should not be imposed for non-compliance with the aforesaid directions issued by the RBI.

After considering the bank’s reply to the notice, oral submissions made during the personal hearing, and additional submissions, the RBI came to the conclusion that the aforesaid charge was substantiated and warranted imposition of monetary penalty, the RBI said.

The RBI’s enforcement operations are conducted by the Enforcement Department. The RBI’s EFD was set up in April 2017 to separate enforcement action from the supervisory process. EFD identifies actionable violations from the inspection reports, risk assessment reports, and scrutiny reports.

Market intelligence reports, references from the top management, and complaints are also used for investigation. An Adjudication Committee then adjudicates the violations and determines the quantum of the penalty. The penalty thus imposed would be disclosed by RBI in the form of a press release and by the regulated entity as per the disclosure norms. The regulated entity will then be required to pay the penalty within a specific period.

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