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Vyaparik Audhyogik Sahakari Bank Limited

Co-operative bankIndore, Madhya Pradesh

The RBI action, regulatory basis, and operating impact linked to this entity.

Recorded RBI impact

Fine: Rs 1.00 L

Monetary penalty · Fresh imposition

S1

Published by RBI

27 Feb 2023

Case Brief

The Reserve Bank of India imposed a monetary penalty of Rs 1 lakh on Vyaparik Audhyogik Sahakari Bank Limited, Indore (Madhya Pradesh), for contravention of RBI Directions issued to Urban Co-operative Banks on Exposure Norms & Statutory/Other Restrictions-UCBs and Investments by Primary (Urban) Co-operative Banks. RBI said the bank had breached the prudential inter-bank counterparty limit with multiple banks, based on a risk assessment of the bank's financial position as on March 31, 2022. The penalty was imposed under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, after considering the bank's reply and oral submissions. RBI clarified that the action was based on regulatory deficiencies and did not reflect on the validity of any customer transaction or agreement.

Why RBI Acted

Capital & exposure normsReporting & disclosure

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 concluding that Vyaparik Audhyogik Sahakari Bank Limited did not comply with RBI directions applicable to Urban Co-operative Banks on Exposure Norms & Statutory/Other Restrictions-UCBs and Investments by Primary (Urban) Co-operative Banks. The specific deficiency cited was breach of the prudential inter-bank counterparty limit with multiple banks, based on the bank's financial position as of March 31, 2022. RBI stated the penalty was for regulatory non-compliance and not a pronouncement on customer transactions.

Operating Impact

The bank must bear the monetary penalty and ensure future compliance with RBI exposure norms and statutory/other restrictions for urban co-operative banks. There is no stated operational ban or withdrawal of banking services, but the finding may affect supervisory scrutiny and requires corrective compliance controls.

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 1.00 L
Order Date
20 Feb 2023
Effective From
20 Feb 2023
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank