RBI imposed Monetary Penalty on Baroda Gujarat Gramin Bank

The Reserve Bank of India(RBI) has imposed Monetary Penalty on Baroda Gujarat Gramin Bank for contravention of directions issued. RBI notified this via issuing Press Release.

The Press released issued, “RBI has imposed a monetary penalty of Rs.5.00 lakh on Baroda Gujarat Gramin Bank, Vadodara (Gujarat) (the bank) for contravention of directions issued by NABARD on ‘Frauds – Guidelines for Classification, reporting and Monitoring of Frauds’, by an order dated August 07, 2023. This penalty has been imposed in exercise of powers vested in the RBI under the provisions of Section 47A (1) (c) read with Sections 46 (4) (i) and 51 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.

The statutory inspection of the bank conducted by NABARD with reference to its financial position as of March 31, 2021, the Inspection Report pertaining thereto, and examination of all related correspondence revealed, among other things, that the bank failed to report five fraud cases to NABARD within the prescribed timeline, resulting in a violation of the aforementioned NABARD directions.

Based on this, a notice was given to the bank, instructing it to show cause why a penalty should not be levied for noncompliance with the specified orders.

The RBI concluded that the aforementioned allegation of non-compliance with NABARD guidelines was proved and merited imposition of monetary penalty after reviewing the bank’s response to the notice and oral representations made during the personal hearing.