Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
14 Sept 2021
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹5.00 lakh on The Kuppam Co-operative Town Bank Ltd., Kuppam, Chittoor District, Andhra Pradesh. The penalty was based on inspection findings that the bank had contravened or failed to comply with RBI directions contained in the Master Circular on Income Recognition, Asset Classification, Provisioning and other related Matters – UCB’s and the Master Circular on Board of Directors – UCBs. After issuing a show-cause notice and considering the bank’s reply and oral submissions, RBI concluded that the violations were substantiated and warranted penalty under the Banking Regulation Act, 1949.
Why RBI Acted
RBI imposed a monetary penalty after an inspection (financial position as on March 31, 2019) found contravention/non-compliance with directions issued in the Master Circular on Income Recognition, Asset Classification, Provisioning and other related Matters – UCB’s dated July 01, 2015 and the Master Circular on Board of Directors – UCBs dated July 01, 2015. RBI issued a show-cause notice, considered the bank’s written and oral submissions, and concluded the charges were substantiated. The penalty was imposed under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949.
Operating Impact
The bank must absorb the monetary penalty; the order does not say RBI has imposed any further operational restriction or customer-facing ban. The action is backward-looking, addressing compliance failures already identified in inspection, and does not itself change depositors’ or borrowers’ immediate access to services.
Regulatory Basis
- Section 47 A (1) (c)
- Section 46 (4) (i)
- Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 5.00 L
- Order Date
- 14 Sept 2021
- Effective From
- 14 Sept 2021
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank