“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,” said the central bank.
Detailing its inspection report of the bank, the RBI said that, “based on its financial position as on March 31, 2020 and March 31, 2021, revealed, inter alia, that the bank’s investment in commercial paper breached the prudential individual exposure limit of 15% of capital funds. 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.”
Also Read: Top 7 stock picks by Sanjiv Bhasin, AnandRathi, MotilalOswal and Nuvama; Check target price, stop loss
The RBI said, “After considering the bank’s reply and oral submissions during the personal hearing, RBI came to the conclusion that the aforesaid charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty.”
On November 21, the RBI had imposed a fine on Bharat Co-operative Bank, Mumbai over regulatory compliance. “The statutory inspection of the bank conducted by RBI with reference to its financial position as on March 31, 2020, and examination of the Risk Assessment Report, Inspection report and all related correspondence pertaining to the same, revealed, inter alia, that the bank did not classify certain accounts as non-performing assets in accordance with the IRAC norms. 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 RBI directions, as stated therein,” the RBI had said in a release dated November 28.