Context:
The Reserve Bank of India (RBI) has imposed monetary penalties on two cooperative banks for violating regulatory norms related to loan disbursals and asset classification, reinforcing its stance on banking compliance and governance standards.
₹5 Lakh Penalty on South Canara District Central Cooperative (SCDCC) Bank
- Violation: Issuance of loans to its own directors, breaching Section 20 read with Section 56 of the Banking Regulation Act
- Inspection: Conducted by NABARD, based on the bank’s financial status as of March 31, 2023
- Penalty Imposed: Under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act
- Process: RBI issued a show-cause notice, reviewed written and oral submissions before concluding a statutory compliance failure
RBI clarified that this penalty pertains solely to compliance issues and does not reflect on the legitimacy of customer transactions or agreements.
₹1 Lakh Penalty on Karnataka Gramin Bank
- Violation: Failure to classify certain loans as non-performing assets (NPAs)
- Non-compliance With: RBI’s directions under the ‘Strengthening of Prudential Norms (2001)’ and ‘Income Recognition and Asset Classification Guidelines (1996)’
RBI emphasized that these penalties are corrective in nature and form part of a broader effort to uphold prudential regulatory practices across the banking sector.
