Recorded RBI impact
Fine: Rs 7.50 L
Monetary penalty · Fresh imposition
Published by RBI
1 Jul 2024
Case Brief
RBI, by order dated June 25, 2024, imposed a monetary penalty of ₹7.50 lakh on The Gujarat Rajya Karmachari Co-operative Bank Ltd., Ahmedabad, Gujarat. The penalty was imposed under the Banking Regulation Act after RBI’s statutory inspection found sustained non-compliance with RBI directions and statutory provisions. The bank was found to have failed to disclose the RBI-imposed penalty in the Notes to Accounts in its annual report, not furnished documents and complete information sought by RBI inspecting officers, breached prudential inter-bank counterparty exposure limits, and not paid interest on matured term deposits from the date of maturity till repayment at the applicable rate. RBI clarified that the action is based on supervisory deficiencies and does not pronounce on the validity of any customer transaction.
Why RBI Acted
RBI imposed a penalty on The Gujarat Rajya Karmachari Co-operative Bank Ltd., Ahmedabad for non-compliance with RBI directions on financial statement presentation/disclosures, placement of deposits with other banks by primary urban co-operative banks, and interest rate on deposits, as well as contravention of section 35(2) read with section 56 of the Banking Regulation Act, 1949. The sustained charges included failure to disclose the RBI-imposed penalty in the Notes to Accounts in the annual report, failure to furnish documents and complete information sought by RBI inspectors, breach of prudential inter-bank counterparty exposure limits, and failure to pay interest on matured term deposits from maturity until repayment at the applicable rate. RBI stated the action was based on regulatory compliance deficiencies and without prejudice to any other action.
Operating Impact
The bank must absorb the monetary penalty and address the compliance lapses identified by RBI. While no operational restriction was imposed, the findings may heighten supervisory scrutiny and could lead to further RBI action if deficiencies persist. Depositors and counterparties are indirectly affected by the bank’s control and compliance weaknesses.
Regulatory Basis
- sub-section (2) of section 35 read with section 56 of the Banking Regulation Act, 1949
- section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949
- section 47A(1)(a) read with sections 46(2) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 7.50 L
- Order Date
- 25 Jun 2024
- Effective From
- 25 Jun 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank