The Reserve Bank of India has imposed a monetary penalty of Rs 90.00 lakh on Vasai Vikas Sahakari Bank Ltd., Vasai, Maharashtra. The UCB was punished for non-compliance with the directions issued by the RBI.
Vasai Vikas Sahakari Bank was found flouting RBI’s directions on “Management of Advances – UCBs”, “Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs.
This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, said the RBI in a release.
The statutory inspection of the bank revealed that the bank had not complied with the RBI directions on ensuring end-use of funds in borrowed accounts and classification of loans/ advances as non-performing assets, specific directions of the RBI for ensuring that the bank’s balance sheet and profit & loss account are signed by at least three of its directors.
In furtherance to the same, a notice was issued to the bank. The UCB’s replies to the notice and oral submissions made during the personal hearing, the RBI concluded that the charge of non-compliance was substantiated and warranted imposition of monetary penalty.
Another bank that was found guilty of flouting RBI’s norms is Citizens Urban Co-operative Bank Ltd., Jalandhar. The Reserve Bank of India has imposed a monetary penalty of Rs 7.00 lakh.
The UCB flouted certain directions issued by the RBI contained in the Master Circular DCBR.BPD. (PCB) MC No.12/09.14.000/2015-16 dated July 01, 2015, on ‘Income Recognition, Asset Classification, Provisioning, and Other Related Matters – UCBs’.
This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
The inspection report of the bank based on its financial position as of March 31, 2019, revealed non-adherence to directions, viz., non-identification of NPAs, wrong classification of assets, and inadequate provisions made due to the wrong classification of assets. Based on the same, a Notice was issued to the bank advising it to show cause as to why a penalty should not be imposed for violation of the said directions.
After considering the bank’s reply and oral submissions made during the personal hearing, the RBI concluded that the aforesaid charges of non-adherence to /violation of the RBI directions were substantiated and warranted imposition of monetary penalty.
