RBI imposes Rs 50,000 penalty on the Stambhadri Co-operative Urban Bank for regulatory non-compliance
Jan 08, 2024
New Delhi [India], January 8 : The Reserve Bank of India (RBI) has recently taken regulatory action against The Stambhadri Co-operative Urban Bank Ltd. situated in Khammam, Telangana.
The central bank, through an order dated December 19, 2023, has imposed a monetary penalty of Rs 50,000 on the cooperative bank. This penalty has been levied due to the bank's non-compliance with specific directives issued by the RBI.
The regulatory actions are based on the deficiencies observed in the bank's adherence to RBI guidelines related to the functioning of Urban Co-operative Banks (UCBs).
In particular, the RBI found the bank to be in violation of directives concerning the composition of the Board of Directors of UCBs.
Additionally, the bank was found to have breached guidelines related to loans and advances extended to directors, their relatives, and firms or concerns in which they hold an interest.
The statutory inspection carried out by the RBI, evaluating the financial position of The Stambhadri Co-operative Urban Bank as of March 31, 2022, revealed these lapses in compliance. The Inspection Report, Risk Assessment Report, and related correspondences highlighted instances where the bank had extended loans to a director and the relatives of directors.
In response to these findings, the RBI issued a notice to the bank, providing an opportunity to explain and show cause as to why a penalty should not be imposed for non-compliance with the aforementioned RBI directives.
The bank, in its reply and during the subsequent personal hearing, presented its arguments and explanations.
However, after a thorough examination of the bank's response and considering the oral submissions made during the personal hearing, the RBI concluded that the charges of non-compliance with the RBI directions were substantiated.
Consequently, the monetary penalty of Rs 50,000 was imposed on The Stambhadri Co-operative Urban Bank Ltd.
It's important to note that the RBI emphasizes that this regulatory action is based on deficiencies in regulatory compliance and does not intend to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
The penalty is imposed under the powers conferred on the RBI by Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
