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RBI Imposes Penalty On Sarvodaya Co-operative Bank; Know Why

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The Reserve Bank of India (RBI) levied a monetary penalty of Rs 1 lakh on Sarvodaya Commercial Co-operative Bank on July 27 for non-compliance with RBI guidelines on "Loans and advances to directors, family, and enterprises in which they are involved," according to an announcement from the RBI.

 

This action is based on regulatory compliance issues and is not meant to be a judgment on the legitimacy of any transaction or agreement between the bank and its customers.

RBI Imposes Penalty On Sarvodaya Co-operative Bank; Know Why

"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.

Why RBI imposed a fine on Sarvodaya Co-operative bank?

The RBI's statutory inspection of the bank, which included a review of all associated correspondence and reference to the bank's financial status as of March 31, 2018, discovered, among other things, non-compliance with the aforementioned orders issued by the RBI.

A notice was sent to the bank in this regard, directing it to show cause why a penalty should not be imposed for non-compliance with the aforementioned RBI directives. The RBI concluded that the aforementioned accusation was proved after reviewing the bank's response to the notification, oral representations made during the personal hearing, and further submissions, the RBI said.

 

For violating specific regulatory guidelines, the Reserve Bank has previously levied penalties on four co-operative banks, including a Rs 112.50 lakh punishment on Hyderabad-based Andhra Pradesh Mahesh Co-operative Urban Bank.

Read more about: rbi banks
Story first published: Tuesday, July 27, 2021, 18:56 [IST]
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