The Reserve Bank of India has imposed a monetary penalty on two Mumbai-based cooperative banks – Zoroastrian Co-operative Bank and Bharat Co-operative Bank for violating the rules.
Zoroastrian Co-operative Bank, Mumbai has been fined Rs 1.25 crore by the RBI for not complying with their guidelines on ‘Discounting of Bills by UCBs – Limited Letters of Credit and the Co-operative Bank Rules, 1985.
On the other hand, RBI fined Bharat Co-operative Bank (Mumbai) Rs. 50.00 lakhs for non-compliance with the guidelines on “Revenue Recognition, Asset Classification, Provisioning, and Other Related Matters” (IRAC Norms).
The RBI on Monday evening said the monetary action against the Zoroastrian Cooperative Bank is based on regulatory non-compliance and is not intended to invalidate any transaction or agreement entered into by the bank with its customers.
A notice has been issued to the Bank to show cause why a penalty should not be imposed for non-compliance with the instructions/rules mentioned therein by the Central Bank.
After hearing, RBI Bank has come to the conclusion that the allegation of non-compliance with the above guidelines/rules has been proved and warrants the imposition of a monetary penalty to the extent of non-compliance with the said guidelines/rules.
The monetary action against Bharat Co-operative Bank was made for non-compliance with the directions issued by the Central Bank. a penalty of Rs. 50 lakh was imposed under section 47A(1)(a). (c) as amended with section 46, paragraph 4 letter i) and 56 of the Banking Regulation Act of 1949 (BR Act).
In order to impose a financial penalty on Bharat Cooperative Bank, the RBI issued a statement that the statutory inspection of the bank carried out by it with regard to its financial position as on March 31, 2020, and review of the Risk Assessment Report, Inspection Report and all related correspondence inter alia revealed that the bank did not classify some accounts as non-performing assets in accordance with IRAC.
In addition, RBI disclosed that Indian Mercantile Co-operative Bank Ltd., Lucknow, Uttar Pradesh had been fined Rs.20.00 lakh vide order dated November 24, 2022, for non-compliance with the guidelines issued under “Recognition of Income, Classification of Assets. , provision and other related matters’ (IRAC standards).
In a statement, the RBI said the action is based on non-compliance and is not meant to question the legality of any transaction or agreement entered into by the bank with its clients.