RBI imposed Monetary Penalty on Co-operative Bank; Check Details

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs.5.00 lakh (Rupees Five lakh only) on The Bharat Co-operative Bank Limited, Bengaluru, Karnataka (the bank) for failing to follow or breaking instructions given in accordance with Exposure Norms, Statutory Restrictions, and Other Restrictions – UCBs. This fine has been levied in accordance with the authority granted to RBI under Sections 47A (1)(c) read in conjunction with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949 (AACS), taking into account the bank’s failure to follow the aforementioned instructions from RBI via order dated November 28, 2022.

This action is based on regulatory compliances inadequacy and it is not meant to rule on the legality of any agreements or transactions the bank has with its clients.

Background

According to the bank’s inspection reports based on its financial standing as of March 31, 2020 and March 31, 2021, the bank’s investment in commercial paper exceeded the prudential individual exposure limit of 15% of capital funds, among other things. Based on this, a notice was sent to the bank asking it to provide justification for not imposing a fine for failing to follow the instructions.

After taking into account the bank’s response and oral arguments made during the in-person hearing, RBI determined that the aforementioned charge of failing to follow RBI instructions was true and called for the imposition of a financial penalty.