RBI action is based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, November 20, 2023: The Reserve Bank of India (RBI) has, by separate orders in September, October and November, 2023, imposed a monetary penalty on 2 coop banks and 1 NBFCs. RBI) has imposed a monetary penalty on Sangli Sahakari Bank, Pudukkottai Co-operative Town Bank, TN and Sappers Finance and Consultancy. These actions on the said 3 entities are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on November 20, 2023.
1 The Reserve Bank of India (RBI), by an order dated September 15, 2023, has imposed a monetary penalty of Rs.2.00 lakh (Rupees Two lakh only) on Sangli Sahakari Bank Limited, Mumbai (the bank) for non-compliance with the directions issued by RBI on ‘Board of Directors-UCBs’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949.
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 conducted by RBI with reference to its financial position as on March 31, 2022, and examination of the Inspection report, Risk Assessment Report and all correspondence thereto revealed, inter alia, that the bank had renewed a loan given to a relative of one of its directors. Subsequently, 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, as stated therein.
After considering the bank’s reply to the notice, RBI came to the conclusion that the charge of non-compliance with the aforesaid directions issued by RBI was substantiated and warranted imposition of monetary penalty on the bank.
2 The Reserve Bank of India (RBI) has, by an order dated November 02, 2023, imposed a monetary penalty of ?1.50 lakh (Rupees One lakh fifty thousand only) on Sappers Finance and Consultancy Pvt Ltd., Kolkata (the company) for non-compliance with the directions issued by RBI on (i) ‘Requirement for obtaining prior approval of RBI in cases of acquisition/transfer of control of Non-Banking Financial Companies (NBFCs)’; and (ii) ‘Non-Banking Financial Company Returns (Reserve Bank) Directions, 2016’ read with directions issued by RBI on ‘Format of Statutory Auditors’ Certificate (SAC) to be submitted by NBFCs’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 58G (1) (b) read with Section 58B (5)(aa) of the Reserve Bank of lndia Act, 1934.
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 company with its customers.
Background
A reference was received at RBI and examination of the matter revealed, inter alia, that the company had (i) failed to take prior approval of RBI for change of management; and (ii) failed to submit applicable returns and the statutory auditor’s certificate to RBI. Consequently, a notice was issued to the company advising it to show cause as to why penalty should not be imposed for non-compliance with the said directions, as stated therein.
After considering the company’s reply to the notice and oral submissions made by it during the personal hearing, RBI came to the conclusion that the charge of non-compliance with aforementioned directions issued by RBI was substantiated and warranted imposition of monetary penalty on the company.
3 The Reserve Bank of India (RBI) has, by an order dated October 12, 2023, imposed a monetary penalty of ?25,000/- (Rupees Twenty five thousand only) on The Pudukkottai Co-operative Town Bank Ltd., Pudukkottai, Tamil Nadu (the bank) for non-compliance with the directions issued by RBI on ‘Board of Directors - UCBs’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A (1) (c) read with Sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949 (AACS).
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 conducted by RBI with reference to its financial position as on March 31, 2022, and examination of the Inspection Report revealed, inter alia, that the bank had extended loans to its directors. Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the aforesaid directions, as stated therein.
After considering the bank’s reply to the notice and oral submissions made by it during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid directions issued by RBI was substantiated and warranted imposition of monetary penalty on the bank.
