These actions on 5 entities are based on their deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, July 20, 2024: The Reserve Bank of India (RBI) has, by separate orders in July 2024, imposed a monetary penalty on 4 Co-operative banks and 1 NBFC. These actions on the concerned coop banks and an NBFC are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on July 19, 2024 and July18, 2024.
The RBI has imposed a monetary penalty on Muthoot Finance; Vizianagaram DCCB, Andhra Pradesh; Chandrapur DCCB, Maharashtra; Vaishali DCCB, Bihar and Harihareshwara UCB Karnataka.
1 The Reserve Bank of India (RBI) has, by an order dated July 15, 2024, imposed a monetary penalty of Rs1,90,000/- (Rupees One Lakh Ninety Thousand only) on Muthoot Finance Limited (the company) for non-compliance with certain provision of ‘Know Your Customer (KYC) Directions, 2016’ issued by RBI. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of clause (b) of sub-section (1) of section 58G read with clause (aa) of sub-section (5) of section 58B of the Reserve Bank of India Act, 1934.
The statutory inspection of the company was conducted by RBI with reference to its financial position as on March 31, 2022. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.
After considering the company’s reply to the notice, oral submissions made by it during the personal hearing, RBI found, inter alia, that the charge of allotting more than one Unique Customer Identification Code (UCIC) to its individual customers was sustained, warranting imposition of monetary penalty.
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 company with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the company.
2 The Reserve Bank of India (RBI) has, by an order dated July 15, 2024, imposed a monetary penalty of Rs50,000/- (Rupees Fifty Thousand only) on The District Co-operative Central Bank Limited, Vizianagaram, Andhra Pradesh (the bank) for non-compliance with certain directions issued by The National Bank for Agriculture and Rural Development (NABARD) on ‘Frauds - Guidelines for Classification, Reporting and Monitoring’. This penalty has been imposed in exercise of powers vested in RBI, conferred under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
The statutory inspection of the bank was conducted by NABARD with reference to its financial position as on March 31, 2023. Based on supervisory findings of non-compliance with NABARD directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions. After considering the bank’s reply to the notice and oral submissions made by it during the personal hearing, RBI found, inter alia, that the charge of delay in reporting of frauds to NABARD was sustained, warranting imposition of monetary penalty.
This action is based on deficiency 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. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
3 The Reserve Bank of India (RBl) has, by an order dated July 08, 2024, imposed a monetary penalty of Rs2.50 lakh (Rupees Two Lakh Fifty Thousand only) on Chandrapur District Central Co-operative Bank Limited, Chandrapur, Maharashtra (the bank) for contravention of the provisions of section 20 read with section 56 of the Banking Regulation Act, 1949 (BR Act). This penalty has been imposed in exercise of powers vested in RBI, conferred under section 47A(1)(c) read with sections 46(4)(i) and 56 of the BR Act, 1949.
The statutory inspection of the bank was conducted by National Bank for Agriculture and Rural Development (NABARD) with reference to its financial position as on March 31, 2022. Based on the supervisory findings of non-compliance with statutory provisions and related correspondence in that regard, a notice was issued to the bank, advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said provisions, as stated therein. After considering the bank's reply to the notice and oral submissions made by it during the personal hearing, RBI found, inter alia, that the charge of sanctioning loans to its directors was sustained, warranting imposition of monetary penalty.
This action is based on deficiency 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. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
4 The Reserve Bank of India (RBI) has, by an order dated July 15, 2024, imposed a monetary penalty of Rs50,000/- (Rupees Fifty Thousand only) on Sree Harihareshwara Urban Co-operative Bank Limited, Harihar, Karnataka (the bank) for non-compliance with certain directions issued by RBI on ‘Exposure Norms and Statutory/Other Restrictions − UCBs’. This penalty has been imposed in exercise of powers vested in RBI, conferred under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
The statutory inspection of the bank was conducted by RBI with reference to its financial position as on March 31, 2022. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said direction. After considering the bank’s reply to the notice and oral submissions made by it during the personal hearing, RBI found, inter alia, that the charge of non-adherence to the prudential inter-bank (gross) and counter party exposure limits was sustained, warranting imposition of monetary penalty.
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. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
5 The Reserve Bank of India (RBI) has, by an order dated July 11, 2024, imposed a monetary penalty of Rs1.00 lakh (Rupees One Lakh only) on The Vaishali District Central Co-operative Bank Ltd., Bihar (the bank) for non-compliance with certain directions issued by RBI on ‘Know your Customer (KYC) norms’. This penalty has been imposed in exercise of powers vested in RBI, conferred under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
The statutory inspection of the bank was conducted by National Bank for Agriculture and Rural Development (NABARD) with reference to its financial position as on March 31, 2023. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said direction. After considering the bank’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI found, inter alia, that the charge of failure to put in place a system of periodic review of risk categorisation of accounts was sustained, warranting imposition of monetary penalty.
This action is based on deficiency 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. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
