Case Brief
What Happened
RBI imposed a monetary penalty of Rs 7.00 lakh on The Urban Co-operative Bank Ltd., Budaun by an order dated May 14, 2024. The penalty was imposed for contravention of section 26A(2) read with section 56 of the Banking Regulation Act, 1949, and for non-compliance with specific RBI directions issued under the Supervisory Action Framework (SAF) and the direction on investments by Primary (Urban) Co-operative Banks. RBI said the bank had not transferred eligible amounts to the Depositor Education and Awareness Fund within the prescribed time, offered interest rates higher than SBI’s on deposits of various tenors, sanctioned fresh loans and advances with risk weights above 100% in violation of SAF, and breached prudential inter-bank exposure limits on gross and counterparty basis. RBI stated the action was based on supervisory deficiencies and did not pronounce on the validity of customer transactions.