RBI imposes Monetary Penalty on District Co-operative Central Bank; Know Reason

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs.10,000 on The District Co-operative Central Bank Ltd., Mahabubnagar, Telangana (the bank) for non-compliance with the directions issued by the National Bank for Agriculture and Rural Development (NABARD) on ‘Review of Frauds – Guidelines on Monitoring and Reporting System’ read with ‘Frauds – Guidelines for Classification, Reporting and Monitoring of Frauds’ by an order dated November 15, 2023.

The statutory inspection of the bank conducted by NABARD with reference to its financial position as of March 31, 2022, and examination of the Inspection Report, as well as all correspondence related thereto, revealed, among other things, that the bank had failed to report cases of fraud to NABARD within the timeframe specified. As a result, a notice was sent to the bank, urging it to show cause why a penalty should not be imposed on it for failing to comply with the aforementioned orders, as specified therein.

After reviewing the bank’s response to the notice as well as its oral representations during the personal hearing, the RBI concluded that the allegation of non-compliance with the aforementioned NABARD orders was proved and merited imposition of monetary penalty on the bank.

This penalty has been imposed in exercise of powers conferred on 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.