RBI’s Bank of Karnataka, Saraswat Cop Bank fined c.50 crore; The reason is here

The Reserve Bank of India (RBI) has imposed a fine of Rs 1.20 crore on Karnataka Bank Limited for non-compliance with the provisions of the RBI regarding prudent policies regarding income tax recognition, asset classification (IRAC) and provisions of law. In advance – deviations in NPA accounts “and” prudent rules regarding provisions relating to income recognition, asset classification and advancement “.

Reserve Bank of IndiaIANS

Bank of India fines Rs 5 crore for non-compliance with RBI guidelines on income recognition, asset classification and advance provisions – deviation in NPA accounts, current account opening by banks – and “classification of frauds and Report “.

Saraswat Cooperative Bank has been fined Rs 3 million for non-compliance with RBI guidelines on Income Recognition and Asset Classification (IRAC) policy.

Why did RBI impose financial penalties on these banks?

At the end of the RBI’s inspection of the legitimacy of Q&A banks, as of March 31, 2017, and March 31, 2018, and published the Financial Risk Assessment Report (RR), Inter-Alia, did not comply with the above guidelines issued by the RBI.

Karnataka Bank

Police members outside the Karnataka Bank in ChennaiIANS

In addition, a show-cause notice was issued to the banks seeking answers and valid reasons as to why they would not be fined for complying with the RBI guidelines.

After making oral submissions from the banks in question during the private hearing and considering the response to the show cause notice, further scrutiny of submissions, the RBI in its final reply concluded that the allegation of allegiance would be levied on Bank of India, Karnataka Bank and Saraswat Cooperative Bank in the form of financial penalties.

Under which section was the fine imposed by RBI?

The RBI, as the Central Financial Authority of India, has exercised its power to impose non-compliance charges (fines on banks) under Section 4 46A (1) (c), Section 4 46 (4) (i) and Section 51 (1). , Section 56 (Act) of the Banking Regulation Act, 1949. The move by the RBI is based on a deficit in regulatory compliance.

Reserve Bank of India

Reserve Bank of IndiaReuters

However, the fines are not intended to imply on the legitimacy of any transaction or agreement signed with the bank’s customers.

Other instructions issued by the RBI

RBI has issued instructions to Rupak Samabaya Bank Limited under Section 35A of the Banking Regulation Act, 1949 (AACS), UBDC.CBSD-I / D-28 / 12.22.21812 / 2012-13 dated 21st February. Since the closure of the business on February 6, 2013, the validity of the 2013 guidelines has been extended from time to time through subsequent guidelines.

The last instruction given to Rupee Co-operative Bank Limited on February 2, 2020 was valid for review and extended for three months till May 20, 2020.

The RBI exercised its powers under sub-section (1) of section 56 (3) of the Banking Regulation Act, 1979, through directive DOR.AID /, from June 1, 2010 to August 31, 2020. . D-82 / 12.22.218 / 2019-20 dated 26 May 2020, subject to further review.

The above increase issued by Rupee Co-operative Bank does not imply that the RBI is satisfied with the significant improvement in the financial condition of the bank.

About the author: Dale Freeman

Typical organizer. Pop culture fanatic. Wannabe entrepreneur. Creator. Beer nerd.

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