Case Brief
What Happened
The Reserve Bank of India imposed a monetary penalty of Rs 1 lakh on Vyaparik Audhyogik Sahakari Bank Limited, Indore (Madhya Pradesh), for contravention of RBI Directions issued to Urban Co-operative Banks on Exposure Norms & Statutory/Other Restrictions-UCBs and Investments by Primary (Urban) Co-operative Banks. RBI said the bank had breached the prudential inter-bank counterparty limit with multiple banks, based on a risk assessment of the bank's financial position as on March 31, 2022. The penalty was imposed under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, after considering the bank's reply and oral submissions. RBI clarified that the action was based on regulatory deficiencies and did not reflect on the validity of any customer transaction or agreement.