RBI imposes monetary penalties on these two Gujarat and Pune-based banks

The Raj Rajgurunagar Sahakari Bank Limited was fined ₹4 lakh over non-compliance with the central bank’s directions on interest rates and deposits. While the Co-operative Bank of Rajkot was fined a sum of ₹2 lakhs for non-compliance with regulations related to awareness schemes.

The inspection report of the Raj Rajgurunagar Sahakari Bank had shown that the bank failed to pay interest on balances in current accounts of deceased individual depositors/sole proprietorship businesses while making payments to the claimants.

The RBI issued a Notice to the bank, advising it to show cause why a penalty should not be imposed for failure to comply with its directions. After reviewing the bank’s written response to the show cause notice, the RBI determined that the charges of non-compliance with its directions were substantiated and warranted the imposition of monetary penalties.

In a statement on the matter, the RBI said, “This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the 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”

With respect to the Cooperative Bank of Rajkot, the statutory inspection of the bank’s financial conduct by RBI had revealed inter alia, that the bank had not transferred balances lying in certain accounts remaining unclaimed for more than ten years to the Depositor Education and Awareness Fund which resulted in violation of aforementioned central bank’s provisions.

The bank was issued a show cause notice asking why a penalty should not be imposed for non-compliance with the directions issued by RBI. Upon considering the bank’s reply to the notice and oral submissions, the RBI came to the decision that the aforesaid charge was substantiated and warranted imposition of monetary penalty.

In a statement on the matter, RBI said, “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 customer”