RBI imposes Rs.3 Lakh Monetary Penalty on Ordnance Equipment Factory Prarambhik Sahkari Bank

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs.3.00 lakh on Ordnance Equipment Factory Prarambhik Sahkari Bank Ltd., Kanpur (the bank) for non-compliance with specific directions issued by RBI under Supervisory Action Framework (SAF), by an order dated August 08, 2023.

This penalty was imposed by the RBI in accordance with the requirements of Section 47 A (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 statutory inspection report of the bank based on its financial position as on March 31, 2022 revealed, inter-alia, that the bank had offered interest rate on deposits more than those offered by State Bank of India in violation of specific directions issued under SAF.

Based on this, a Notice was given to the bank, directing it to show cause why a penalty should not be levied for failing to comply with the specified directives.

After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI came to the conclusion that the aforementioned charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty.