The Reserve Bank of India has imposed a monetary penalty of Rs 30 lakh on the leading urban cooperative Bank namely Saraswat Co-operative Bank for non-compliance with directions issued by RBI on ‘Income Recognition and Asset Classification (IRAC) norms.’
“The penalty has been imposed in exercise of powers vested in RBI, considering the failure of the bank to adhere to the aforesaid directions issued by RBI”, reads a press release.
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 release clarifies.
The statutory inspection of the bank with reference to its financial position as on March 31, 2018, conducted by RBI, revealed non-compliance with RBI directions on IRAC norms.
In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for failure to comply with the directions issued by RBI.
After considering the bank’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions, RBI concluded that the aforesaid charge of non-compliance with RBI directions on IRAC norms warranted imposition of monetary penalty.
Two other commercial banks penalized along with Saraswat Bank are Bank of India and Karnataka Bank for a sum of Rs 5 crore and Rs 1.2 crore respectively.