Reserve Bank of India – Press Releases

The Reserve Bank of India (RBI) has imposed, by an order dated October 27, 2022, a financial penalty of ₹4.00 lakh (Rupees Four Lakh solely) on Nagar Sahakari Bank Ltd., Maharajganj, UP (the financial institution) for non-compliance with instructions issued underneath Supervisory Action Framework (SAF) by RBI. This penalty has been imposed in train of powers vested in RBI underneath the provisions of Section 47 A (1) (c) learn with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, bearing in mind the failure of the financial institution to stick to the aforesaid instructions issued by RBI.

This motion relies on deficiencies in regulatory compliance and isn’t supposed to pronounce upon the validity of any transaction or settlement entered into by the financial institution with its prospects.

Background

The inspection report of the financial institution primarily based on its monetary place as on March 31, 2021, revealed, inter alia, that the financial institution had (i) prolonged contemporary loans and advances carrying threat weights of 100% and above and (ii) provided curiosity on deposits for varied tenors at charges greater than reference charges, in contravention of the instructions issued by RBI underneath a SAF. Based on the identical, a Notice was issued to the financial institution advising it to indicate trigger as to why penalty shouldn’t be imposed for non-compliance with the aforesaid instructions.

After contemplating the financial institution’s reply to the discover and oral submissions made throughout the private listening to, RBI got here to the conclusion that the aforesaid prices of non-compliance with the RBI instructions have been substantiated and warranted imposition of financial penalty.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2022-2023/1114