RBI imposes monetary penalty on Mahabaleshwar Urban Co-operative Bank; Know Details

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs.2.00 lakh on The Mahabaleshwar Urban Co-operative Bank Limited., Mahabaleshwar, Maharashtra (the bank) for contravention of provisions of Section 20A read with Section 56 of the Banking Regulation Act, 1949 (BR Act), specific directions issued by RBI under Supervisory Action Framework (SAF), and directions issued by RBI on ‘Maintenance of Deposit Accounts’ and ‘Know Your Customer (KYC)’.

This monetary penalty was levied by the RBI in accordance with the requirements of Sections 47 A(1)(c), 46(4)(i), and 56 of the BR Act.

This action is based on regulatory compliance problems and is not intended to rule on the legitimacy of any transaction or agreement entered into by the bank with its clients.

The RBI’s statutory inspection of the bank, which focused on its financial position as of March 31, 2022, as well as an examination of the Risk Assessment Report and all related correspondence, revealed, among other things, that the bank had granted interest relief in a loan account of its ex-director, sanctioned new loans and renewed CC limits of its borrowers despite SAF restrictions, and had not conducted an annual review of inoperative accounts and periodic review of risk categorisation of its customers.

In addition, a notice was given to the bank instructing it to show cause why a penalty should not be levied for violating statutory requirements and the directives made therein.

After reviewing the bank’s written response to the notice and oral submissions made during the personal hearing, the RBI determined that the charge of non-compliance with the aforementioned statutory provisions and RBI directions was substantiated and justified the imposition of monetary penalties on the bank.