RBI Charges Monetary Penalty On These 2 Banks: Check Report

The Reserve Bank of India (RBI) has levied a monetary penalty of Rs 5.00 lakh (Rupees five lakh only) on The Swasakthi Mercantile Cooperative Urban Bank Ltd., Vijayawada for contravening/non-compliance with certain sections of the issued directives, according to an order dated September 08, 2021. The order has stated that "This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949 taking into account, the failure of the bank to adhere to the aforesaid directions."

"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," RBI said.

Regarding the reason of monetary penalty charged on The Swasakthi Mercantile Cooperative Urban Bank Ltd. the official order has also mentioned that "The Inspection report of the bank based on its financial position as on March 31, 2019 revealed, inter alia contravention of / non-compliance with the directions issued by RBI on "Board of Directors - UCBs". Based on the same, a Notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the directions."

On the other hand, the Reserve Bank of India (RBI) has also sanctioned a monetary penalty of Rs 40,000 (Rupees Forty Thousand only) on Shikshak Sahakari Bank Ltd., Nagpur, Maharashtra for non-compliance with regulatory guidelines enclosed under "Membership of Credit Information Companies (CICs)" and the provisions of Credit Information Companies Rules, 2006 (CIC Rules). According to the order issued on 8th September 2021 "This penalty has been imposed in exercise of powers vested in RBI under clause (iii) of sub-section (1) of section 25 read with sub-section (4) of section 23 of the Credit Information Companies (Regulation) Act, 2005 (CIC Act)."

RBI further has mentioned in the statement 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."

Regarding the reason for the penalty charged on Shikshak Sahakari Bank Ltd. RBI clarified on its order that "The statutory inspection of the bank conducted by the RBI with reference to the bank's financial position as on March 31, 2019 and the Inspection Report pertaining thereto, and examination of all related correspondence revealed, non-compliance inter alia with the aforesaid directions issued by RBI and the provisions of CIC Rules on reporting of data to Credit Information Companies and failure to take appropriate and necessary steps for ensuring accuracy of data. In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for contravention of the statutory directions and the provisions of CIC Rules, as stated therein."