RBI Imposes Penalty on Jila Sahakari Kendriya Bank for Regulatory Non-Compliance (Representative image)
RBI Imposes Penalty on Jila Sahakari Kendriya Bank for Regulatory Non-Compliance
The Reserve Bank of India (RBI) has taken regulatory action against Jila Sahakari Kendriya Bank Maryadit in Shahdol, Madhya Pradesh. In an order dated January 8, the RBI imposed a penalty of Rs 75,000 on the bank for contravening provisions of the Banking Regulation Act, 1949, particularly Section 26A and Section 56, in conjunction with the ‘Depositor Education and Awareness Fund Scheme, 2014.’
Background: Deficiency in Regulatory Compliance
The penalty is a result of a deficiency in regulatory compliance identified during the statutory inspection of the bank. The National Bank for Agriculture and Rural Development (NABARD) conducted the inspection with reference to the bank’s financial position as of March 31, 2022. The examination revealed that the bank failed to transfer the eligible amount to the Depositor Education and Awareness Fund.
RBI’s Action and Clarification
The RBI clarified in an official statement on Monday that the penalty does not pass judgment on the validity of transactions or agreements between the bank and its customers. The RBI issued a notice to the bank, prompting it to explain why a penalty should not be imposed for non-compliance with statutory provisions. After reviewing the bank’s response and oral submissions, the RBI concluded that the charge of non-compliance was substantiated, justifying the imposition of a monetary penalty on Jila Sahakari Kendriya Bank.