RBI imposes monetary penalty on Bandhan Bank, Janata Sahakari Bank Ltd. and Jalgaon Peoples Co-operative Bank Ltd.

Bandhan Bank Limited

he Reserve Bank of India (RBI) has, by an order dated October 29, 2019, imposed a monetary penalty of Rs One crore on Bandhan Bank Limited (the bank) for non-compliance with the guidelines on promoter holding contained in ‘Guidelines for Licensing of New Banks in Private Sector’ dated February 22, 2013 (licensing guidelines) read with the conditions imposed by RBI in exercise of powers under section 22 of the Banking Regulation Act, 1949 (the Act) at the time of issuing banking licence to the bank. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Act, taking into account the default committed by the bank in complying with the aforesaid licensing guidelines and conditions.

This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank.

Background:

In terms of the aforesaid licensing guidelines read with the licensing conditions, the bank was required to bring down the shareholding of its Non-Operative Financial Holding Company in the bank in excess of 40% of the total paid-up equity capital to 40% within three years from the date of commencement of business of the bank. However, as the bank failed to comply with the said licensing guidelines, a notice (SCN) was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the said licensing guidelines. After considering the reply received from the bank, submissions made by the bank during the personal hearing and the documents submitted by it, RBI came to the conclusion that the bank had failed to comply with the licensing guidelines read with the licensing conditions imposed by RBI and decided to impose monetary penalty on the bank.


Janata Sahakari Bank Ltd., Pune

The Reserve Bank of India (RBI) has imposed, by order dated October 16, 2019, monetary penalty of Rs 1 crore on Janata Sahakari Bank Ltd., Pune (the bank) for non-compliance with directions issued by RBI on Income Recognition and Asset Classification (IRAC) norms, Management of Advances and Exposure Norms and Statutory/ Other Restrictions. The penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, taking into account failure of the bank to adhere to the aforesaid directions issued by RBI.

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.

Background:

The statutory inspection of the bank with reference to its financial position as on March 31, 2018, conducted by RBI, revealed, inter alia, non-compliance with RBI directions on IRAC norms, Management of Advances, Exposure Norms and Statutory/ Other Restrictions and issuance of ATM-cum Debit cards. A Notice was issued to the bank advising it to show cause as to why monetary penalty should not be imposed for non-compliance with the aforesaid directions. After considering the bank’s reply and oral submissions made during the personal hearing, RBI came to the conclusion that the charges regarding non-compliance with the directions on IRAC norms, Management of Advances and Exposure Norms and Statutory/ Other Restrictions, warranted imposition of monetary penalty.


Jalgaon Peoples Co-operative Bank Ltd., Jalgaon (Maharashtra)

The Reserve Bank of India (RBI) has imposed, by order dated October 24, 2019, monetary penalty of Rs25 lakh on the Jalgaon Peoples Co-operative Bank Ltd., Jalgaon, Maharashtra (the bank) for non-compliance with directions issued by RBI on Income Recognition and Asset Classification (IRAC) norms and Management of Advances. The penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, for failure of the bank to adhere to the aforesaid directions issued by RBI.

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.

Background:

The statutory inspection of the bank with reference to its financial position as on March 31, 2018, conducted by RBI, revealed, inter alia, non-compliance with RBI directions on IRAC norms and Management of Advances. A notice was issued to the bank to show cause as to why monetary penalty should not be imposed for non-compliance with the aforesaid directions. After considering the bank’s reply and oral submissions made during the personal hearing, RBI concluded that the aforesaid charges warranted imposition of monetary penalty.


[Reserve Bank of India]

[Press Release dt. 29-10-2019]

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