RBI imposes Monetary Penalty on Sahakari Bank; Know Reason

The Reserve Bank of India (RBI) has imposed Monetary Penalty on Sahakari Bank for non-compliance with the directions issued by RBI.

RBI has imposed a monetary penalty of Rs.3.00 Lakh on The Harij Nagrik Sahakari Bank Ltd., Harij, Gujarat (the bank) for non-compliance with the directions issued by RBI on ‘Maintenance of Cash Reserve Ratio (CRR)’, ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’, and ‘Interest Rate on Deposits – Directions, 2016’, by an order dated August 22, 2023.

The RBI conducted a statutory inspection of the bank with reference to its financial position as of March 31, 2022, and examination of the Inspection Report, Risk Assessment Report, and all correspondence related thereto revealed, among other things, that the bank had (i) failed to maintain the minimum Cash Reserve Ratio for a few days, (ii) breached the inter-bank counter-party exposure limit, and (iii) failed to pay applicable interest on deposits lying in the current account. In addition, a notice was issued to the bank advising it to show cause why a penalty should not be imposed on it for failing to comply with the stated directions.

After considering the bank’s reply to the notice and oral submissions made by it during the personal hearing, RBI came to the conclusion that the aforesaid charge of non-compliance with the RBI directions was substantiated and warranted imposition of monetary penalty.

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. 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.