Maharashtra based Multi-State Scheduled-Jalgaon Peoples Cooperative Bank Chairman Bhalchandra Patil has given his reaction as soon as the RBI imposed penalty of Rs 25 lakh on the bank.
Patil admits that the bank has erred particularly in re-settling the loan accounts. The action is based on deficiencies in the regulatory compliance.
“After demonetization, implementation of GST and the Supreme Court putting several restrictions on shopkeepers hampered our customers business. They faced difficulty in paying instalments and asked us to offer a moratorium on repayment or extend the repayment period”.
He further added that considering their suggestions we had re-settled their accounts under the RBI rules and regulations but there were some technical mistakes made by the bank.
It is normal for RBI to fine a bank if it does not follow the prescribed rules and regulations. The inspection conducted by RBI in 2018, March found several deficiencies which were against the RBI norms. We have also given explanations to RBI but we have yet to pay the fine, Patil underlined.
Readers would recall that the Reserve Bank of India (RBI) had imposed monetary penalty of Rs 25 lakh on the Jalgaon Peoples Co-operative Bank for non-compliance with the directions issued by RBI on Income Recognition and Asset Classification (IRAC) norms and Management of Advances.
The penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, for 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.
The bank has a business mix of over Rs 2900 crore and earned a net profit of Rs 4.40 crore in the last financial year 2018-19. The banks has a network of 40 branches across two states.
The bank’s Gross & Net NPAs have increased from 8.38% to 17.54% and 5.61% to 13.22% during the 2018-19 financial year.