Case Brief
What Happened
By an order dated September 02, 2021, RBI imposed a monetary penalty of Rs 50 lakh on Bombay Mercantile Co-operative Bank Ltd., Mumbai. The penalty was imposed because the bank failed to comply with RBI directions under the Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions, 2016 and specific SAF directions dated March 05, 2018 and April 11, 2018. RBI’s inspection found that the bank had offered higher interest rates on NRE deposits than on comparable domestic rupee term deposits and had sanctioned unsecured advances. RBI clarified that the penalty is for deficiency in regulatory compliance and does not pronounce on the validity of any customer transactions.