RBI Penalizes Satara Sahakari Bank for Regulatory Non-Compliance

RBI Penalizes Satara Sahakari Bank for Regulatory Non-Compliance Representative Image

Ashiq Butt | May 2, 2024 | 07:51 PM IST | India | Follow on Google News

RBI Penalizes Satara Sahakari Bank for Regulatory Non-Compliance

RBI Penalizes Satara Sahakari Bank for Regulatory Non-Compliance

The Reserve Bank of India (RBI) has levied a monetary penalty of Rs 2 lakhs on The Satara Sahakari Bank Limited, based in Mumbai, Maharashtra. The penalty stems from the bank’s failure to adhere to certain provisions outlined in section 12(2) read with section 56 of the Banking Regulation Act, 1949 (BR Act), as well as directives issued by the RBI concerning ‘Prudential Norms on Capital Adequacy – Primary (Urban) Co-operative Banks (UCBs)’.

Violation of Capital Adequacy Norms

RBI’s inspection revealed that The Satara Sahakari Bank Limited allowed the refund of share capital to its members, despite its last assessed Capital to Risk-Weighted Assets Ratio (CRAR) being below the mandated threshold of 9 percent. This breach of capital adequacy norms signifies a significant regulatory violation, prompting RBI to impose the monetary penalty.

The CRAR is a crucial measure of a bank’s financial health, reflecting its ability to absorb losses. By allowing refunds of share capital despite a deficient CRAR, the bank was operating outside the regulatory framework established by the RBI. Such actions not only undermine the stability of the bank itself but also pose systemic risks to the broader financial sector.

RBI’s Regulatory Oversight

The penalty imposed by the RBI underscores the regulator’s commitment to ensuring compliance within the banking sector. Upholding regulatory standards is paramount to maintaining financial stability and safeguarding the interests of depositors and stakeholders.

The enforcement action against The Satara Sahakari Bank Limited serves as a reminder to all financial institutions of the importance of adhering to regulatory directives and maintaining robust risk management practices.

Ashiq Butt

Ashiq Butt – is VoM News's senior staffer worked since year 2015 and he deals with correspondency and social media handles. Hailing from Doda's Marmat, Ashiq has strong grip over the collection of the data and it's compiling feature.