On November 21, the Reserve Bank of India (RBI) fined The Parwanoo Urban Cooperative Bank Ltd, Parwanoo Himachal Pradesh, Rs 3 lakh for breaching certain regulations.
“Under Section 47A(1)(c) of the Banking Regulation Act, 1949, read together with Sections 46(4)(i) and 56, having regard to the Bank’s failure to comply with the above directions issued by the Reserve Bank of India,” the RBI said in a release.
In its statement, the RBI clarified that the penalty was not intended to declare the validity of any transaction or agreement entered by the company with its clients.
Based on the bank’s financial position as of March 31, 2021, the bank’s inspection report and risk assessment report showed that the bank had not complied with specific directions given to banks by the RBI under the Supervisory Action Framework (SAF), the central bank said. Subsequently, a notice was issued to the bank and penalties were imposed.
Enforcement actions by RBI are carried out by law enforcement. The RBI’s EFD was established in April 2017 to separate enforcement actions from regulatory processes. EFD identifies actionable violations from inspection reports, risk assessment reports and audit reports.
Market intelligence reports, top management references and complaints are also used in the investigation. The Adjudication Board then adjudicates the violation and determines the penalty amount. Penalties thus imposed are disclosed by the RBI in a press release and by the regulated entity by the disclosure norms. The regulated entity will then be required to pay the fine within a certain period.