Category: Press Releases

It is hereby notified for information of the public that in exercise of powers vested in it under sub section (1) of Section 35 A of the Banking Regulation Act, 1949 read with Section 56 of the Banking Regulation Act, 1949, the Reserve Bank of India (RBI) vide Directive Ref. No. DoS.CO.UCBs-West/D-1/12.07.157/2020-21 dated February 03, 2021 has issued certain Directions to Sarjeraodada Naik Shirala Sahakari Bank Ltd, Shirala, Dist. Sangli, Maharashtra, whereby, as from the close of business on February 03, 2021, the Administrator of the aforesaid bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI Direction dated February 03, 2021 a copy of which is displayed on the bank’s premises for perusal by interested members of the public. In particular, a sum not exceeding ₹500 (Rupees Five hundred only) of the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn subject to the conditions stated in the above RBI Directions.

2. The issue of the above Directions by the RBI should not per se be construed as cancellation of banking license by RBI. The bank will continue to undertake banking business with restrictions till its financial position improves. The Reserve Bank may consider modifications of these Directions depending upon circumstances.

3. These Directions shall remain in force for a period of six months from the close of business on February 03, 2021 and are subject to review.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/1043

The Reserve Bank of India (RBI) has, by an order dated February 02, 2021, imposed a monetary penalty of ₹55 lakh (Rupees Fifty Five lakh only) on Seva Vikas Cooperative Bank Limited, Pune (the bank) for non-compliance with certain directions issued by RBI contained in the “Master Circular – Management of Advances -UCBs” and “Master Circular – Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs.”

The penalty has been imposed on the bank in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, (i) for not ensuring end use of funds lent (ii) non-adherence to IRAC norms and (iii) restructuring of loan accounts with retrospective effect on grounds not valid, revealed during a scrutiny of the bank conducted by RBI during 2019.

A notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for such non-compliance with the aforesaid directions. After considering the bank’s reply to the notice, RBI concluded that the charge of non-compliance with aforesaid RBI directions was substantiated and warranted imposition of monetary penalty.

This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/1042

The Reserve Bank of India (RBI) has, by an order dated February 2, 2021, imposed a monetary penalty of ₹1.00 lakh (Rupees one lakh only) on The Kalpavruksha Co-operative Bank Limited (the bank) for non-compliance with certain directions issued by RBI contained in the “Master Circular on Board of Directors-UCBs”.

The penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) of the Banking Regulation Act, 1949, for non-compliance by the bank with the directions prohibiting grant of loans and advances to directors, or their relatives and the firms/concerns/companies in which they are interested, as revealed during the statutory inspection of the bank with reference to its financial position as on March 31, 2019.

A notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for such non-compliance with the directions. After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI concluded that the charge of non-compliance with aforesaid RBI directions was substantiated and warranted imposition of monetary penalty.

This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/1041

RBI had announced in the ‘Statement on Developmental and Regulatory Policies’ issued as part of the Monetary Policy Statement dated December 4, 2020 that with a view to strengthen the Internal Audit Function, which works as a third line of defence, suitable guidelines will be issued to large UCBs and NBFCs on adoption of Risk Based Internal Audit (RBIA).

Accordingly, a circular on RBIA covering all deposit taking Non-Banking Finance Companies (NBFCs); all non-deposit taking NBFCs (including Core Investment Companies) with asset size of ₹5,000 crore and above; and all Primary (Urban) Co-operative Banks (UCBs) with asset size of ₹500 crore and above has been issued today.

The circular intends, inter alia, to provide the essential requirements for a robust internal audit function, which include sufficient authority, stature, independence, resources and professional competence, so as to align these requirements in larger NBFCs/UCBs with those stipulated for Scheduled Commercial Banks. It is expected that the adoption of RBIA by such entities would help to enhance the quality and effectiveness of their internal audit system.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/1036