Recorded RBI impact
Fine: Rs 25.0 L
Monetary penalty · Fresh imposition
Published by RBI
13 Aug 2021
Case Brief
By an order dated August 12, 2021, RBI imposed a monetary penalty of Rs 25 lakh on Madhya Pradesh Rajya Sahakari Bank Maryadit, Bhopal, Madhya Pradesh. The penalty was imposed for non-compliance with regulatory directions issued by NABARD in the framework titled “Review of Frauds - Guidelines on Monitoring and Reporting System”. RBI said the action followed a statutory inspection with reference to the bank’s financial position as on March 31, 2019, which revealed non-compliance in reporting of frauds, contrary to the applicable provisions of the Banking Regulation Act, 1949. After a show-cause notice, the bank’s reply, oral hearing, and written submissions were considered, RBI found the charge substantiated and imposed the penalty under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Act.
Why RBI Acted
RBI imposed a monetary penalty because the bank did not comply with regulatory directions issued by NABARD under the “Review of Frauds - Guidelines on Monitoring and Reporting System”. The statutory inspection and related examination of fraud-reporting correspondence found non-compliance in contravention of the Banking Regulation Act, 1949; RBI issued a show-cause notice, considered the bank’s reply and submissions, and concluded the charge was substantiated.
Operating Impact
The bank must absorb the monetary penalty and ensure its fraud-monitoring and fraud-reporting controls comply with NABARD/RBI regulatory directions going forward. The release does not impose an operational restriction on customers, but it signals heightened compliance expectations around regulatory reporting and governance.
Regulatory Basis
- section 47 A (1) (c) read with sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 25.0 L
- Order Date
- 12 Aug 2021
- Effective From
- 12 Aug 2021
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank