RBI imposed Monetary Penalty on Cooperative Bank; Know Why?:

RBI imposed Monetary Penalty on Cooperative Bank; Know Why? The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs3.00 lakh (Rupees Three Lakh only) on The Nakodar Hindu Urban Cooperative Bank Ltd, Nakodar (the bank) for contravention of Section 35A and Section 36 (1) read with Section 56 of the Banking Regulation Act, 1949. This penalty was imposed by the RBI in accordance with the requirements of Section 47A(1)(c), Section 46(4)(i), and Section 56 of the Banking Regulation Act of 1949. This action is based on regulatory compliance problems and is not intended to call into question the legitimacy of any transaction or agreement entered into by the bank with its clients. The bank's compliance on review report of Supervisory Action Framework (SAF) dated July 26, 2021, indicated, among other things, that it had given greater interest rates on deposits for various durations than SBI in violation of the SAF guidelines. Based on this, a Notice was issued to the bank, instructing it to show cause why a penalty should not be levied for violating the precise guidelines made by the RBI. After considering the bank's response and oral submissions made during the Personal Hearing, the RBI concluded that the aforementioned charge of non-compliance with SAF directions issued under Section 35A and Section 36 (1) read with Section 56 of the Banking Regulation Act, 1949 was substantiated and warranted imposition of monetary penalty.