Recorded RBI impact
Fine: Rs 1.50 L
Monetary penalty · Fresh imposition
Published by RBI
23 Jan 2023
Case Brief
The Reserve Bank of India imposed a monetary penalty on Samarth Sahakari Bank Ltd., Solapur (Maharashtra) for contravention of RBI directions issued to Urban Cooperative Banks on Income Recognition and Asset Classification (IRAC). RBI said an inspection based on the bank's financial position as of March 31, 2020 found that certain accounts were not classified according to IRAC norms and provisions were not made as stipulated. After issuing a show-cause notice and considering the bank's replies and oral submissions at a personal hearing, RBI concluded that the non-compliance was substantiated and warranted the penalty under the Banking Regulation Act, 1949.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, after an inspection as on March 31, 2020 found that the bank had failed to comply with RBI's IRAC directions for Urban Cooperative Banks. Specifically, certain accounts were not classified as per IRAC norms and provisions were not made as stipulated. After considering the bank's reply and oral submissions, RBI concluded the charge was substantiated.
Operating Impact
The bank must absorb the Rs 1.50 lakh penalty; the order does not impose any new operational restriction, but it underscores continuing compliance obligations around asset classification and provisioning under IRAC norms.
Regulatory Basis
- Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 1.50 L
- Order Date
- 16 Jan 2023
- Effective From
- 16 Jan 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank