RBI fines Mandi cooperative bank in Rs 6 lakh for not complying with rules

The Mandi Urban Co-operative Bank faced the RBI penalty based on the select inspection of the bank conducted with reference to its financial position as on March 31, 2022

The Reserve Bank of India (RBI) on Wednesday said it has fined the Mandi Urban Co-operative Bank in Himachal Pradesh Rs 6 lakh for “non-compliance” with provisions of its directions on ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’.

“This penalty has been imposed in exercise of powers vested in RBI, conferred under the provisions of section 47A(1)(c) read with sections 46 (4)(i) and 56 of the Banking Regulation Act, 1949,” said the RBI in a press release.

The RBI said that the select inspection of the cooperative bank was conducted with reference to its financial position as on March 31, 2022. “Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions,” it said.

After reviewing the Mandi bank’s response, the RBI said it found that the lender had breached the prudential interbank exposure limit both on a gross and counterparty basis. Consequently, the fine was imposed.

The RBI said the fine 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 with its customers.”

“Imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank,” it said.