RBI imposes monetary penalty on The Vaijapur Merchants Co-operative Bank Ltd., Vaijapur (Maharashtra)
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 4.00 lakh on The Vaijapur Merchants Co-operative Bank Ltd., Vaijapur (Maharashtra) by order dated February 14, 2023. RBI said the bank contravened directions issued to urban co-operative banks on Income Recognition and Asset Classification (IRAC) norms, specifically by not classifying certain accounts as Non-Performing Assets.
RBI imposed the penalty under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, after inspection revealed that the bank had not classified certain accounts as Non-Performing Assets in accordance with RBI's IRAC norms applicable to urban co-operative banks. The bank's replies and submissions were considered, but the charge of non-compliance with RBI directions was found substantiated.
Severity Assessment
This is a monetary penalty of Rs 4 lakh, which falls within the lowest monetary band and there is no broader operational restriction.
The bank must absorb the penalty and ensure future compliance with RBI’s IRAC norms, including correct NPA classification. The order does not itself invalidate any customer transaction or agreement, but it signals increased regulatory scrutiny over the bank’s asset classification practices.
Published as The Vaijapur Merchants Co-operative Bank Ltd., Vaijapur (Maharashtra)
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