RBI imposes monetary penalty on Zoroastrian Co-operative and Bharat Co-operative Bank; here's why

Monetary penalty has been imposed on two Mumbai-based cooperative banks, namely Zoroastrian Co-operative Bank and the Bharat Co-operative Bank by the Reserve Bank of India (RBI) for violating rules. The monetary action was taken by the RBI against the Zoroastrian Co-operative Bank according to the power it has been given under sections 46(4)(i), 56, and 47A(1)(c) of the Banking Regulation (BR) Act, 1949. The penalty has been imposed against Bharat Co-operative Bank by the RBI under section 47A(1)(c) read with sections 46(4)(i) and 56 of the BR Act. The RBI has imposed a fine of Rs 1.25 crore on the Zoroastrian Co-operative Bank for not following its instructions on “Discounting of Bills by UCBs - Restricted Letters of Credit” and the “Co-operative Banks Rules, 1985”. Bharat Co-operative Bank has been fined Rs 50 lakh by the RBI for not following its rules on “Income Recognition, Asset Classification, Provisioning, and Other Related Matters” (IRAC norms). As per the RBI, the action is taken against Zoroastrian Co-operative Bank because of its failure in complying with the regulations and it doesn’t intend to reflect on the validity of transactions/agreements entered into by the bank with its customers. The bank received a notification in which it was instructed to give justification as to why a fine shouldn’t be imposed for failing to follow the instructions/rules indicated therein by the central bank. After hearing from the bank, RBI concluded that the accusation of non-compliance with the aforementioned principles/rules was proven and called for the imposition of a monetary penalty, to the amount of such non-compliance. The RBI had issued a statement after imposing a fine on Bharat Co-operative Bank. As per the statement, the bank’s statutory inspection, which was carried out in relation to its financial situation as of 31 March 2020, and examination of the Risk Assessment Report, Inspection report, and all related correspondence, revealed, among other things, that the bank did not classify some accounts as non-performing assets in line with the norms of Income Recognition and Asset Classification (IRAC). The RBI also revealed that Indian Mercantile Co-operative Bank Ltd., Lucknow, Uttar Pradesh, was fined Rs 20 lakh by way of an order dated 24 November 2022, for not complying with the directives issued under the IRAC norms. Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.