RBI Imposes Penalty on a Co-operative Bank, Check the Bank Name

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 2.00 lakh (Rupees Two Lakh only) on the Urban Co-operative Bank Ltd., Budaun (the bank) for violating Banking Regulatios by an order dated June 07, 2022. This penalty was issued in the execution of RBI’s powers under Section 47 A (1) (c) of the Banking Regulation Act, 1949, read with Section 46 (4) I and Section 56 of the Banking Regulation Act, 1949.

This action is based on regulatory compliance issues and is not meant to be a judgment on the legitimacy of any transaction or agreement between the bank and its customers.

Background

The inspection report of the bank based on its financial position as on March 31, 2020, revealed, inter alia, contravention of sub-section (1) of Section 36 and Section 35 A read with Section 56 of the Banking Regulation Act, 1949, as the bank had failed to adhere to the RBI directions issued under Supervisory Action Framework (SAF) and the RBI directions on Frauds-classification and reporting. Based on the same, a Notice was issued to the bank advising it to show cause as to why a penalty should not be imposed for contravention of RBI directions and the said sections of the Banking Regulation Act, 1949.

After considering the bank’s reply and oral submission made during the personal hearing, RBI came to the conclusion that the aforesaid charges of non-adherence / violation of sub-section (1) of Section 36 and Section 35 A read with Section 56 of the Banking Regulation Act, 1949 were substantiated and warranted imposition of monetary penalty.