Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
9 Jan 2023
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹1.00 lakh on Shree Mahayogi Lakshmamma Cooperative Bank Ltd., Kurnool, Andhra Pradesh, for non-compliance with RBI directions on Income Recognition, Asset Classification, Provisioning and Other Related Matters for UCBs. An inspection based on the bank’s financial position as on March 31, 2021 found that the bank did not classify certain loan accounts as non-performing assets in accordance with IRAC norms. RBI issued a show-cause notice, considered the bank’s reply and oral submissions, and concluded that the contravention was substantiated, warranting penalty under the Banking Regulation Act, 1949 (AACS).
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 (AACS), after an inspection found that the bank had not classified certain loan accounts as non-performing assets in accordance with the IRAC norms / RBI directions on Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs. A show-cause notice was issued, and after considering the bank’s reply and oral submissions, RBI held the charge of non-compliance substantiated.
Operating Impact
The bank must absorb the financial penalty and ensure stricter compliance with RBI’s IRAC norms going forward. The action does not invalidate customer transactions, but it signals regulatory scrutiny over asset classification practices and may require internal controls to be strengthened to avoid repeat violations.
Regulatory Basis
- Section 47 A (1) (c)
- Section 46 (4) (i)
- Section 56 of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- Fine: Rs 1.00 L
- Order Date
- 2 Jan 2023
- Effective From
- 2 Jan 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank