The Reserve Bank of India has, by an order dated November 23, 2022, imposed a monetary penalty of Rs 1.25 crore on Zoroastrian Co-operative Bank Ltd based in Mumbai.
The UCB was found guilty of non-compliance with RBI directions on ‘Discounting of Bills by UCBs – Restricted Letters of Credit (LC)’ and the provisions of the Co-operative Banks (Period of Preservation of Records) Rules, 1985 (Rules) framed under section 45Y read with section 56 of Banking Regulation Act, 1949 (BR Act).
This action is based on deficiency 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, says RBI.
The statutory inspection of the bank conducted by RBI with reference to its financial position as on March 31, 2020, and examination of the Risk Assessment Report led to discovery of act of omission by the UCB.
A notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the RBI directions/Rules, as stated therein. After considering the bank’s reply to the notice, RBI felt the charges were substantiated and thus decided to impose the penalty.