The Reserve Bank of India (RBI) on Monday said it has imposed a monetary penalty of Rs 4 lakh on The Rajkot Commercial Co-operative Bank for contravention of directions issued by RBI for violation of certain rules.

"The penalty was imposed for violations of 'Prudential Norms Income Recognition, Asset Classification, Provisioning and Other Related Matters', 'Placement of Deposits with Other Banks by Primary (Urban) Cooperative Banks (UCBs)’ and ‘Guidelines for Classification and Valuation of Investments by Banks'", said the central bank in its press release.

The penalty has been imposed in the exercise of powers vested in the 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, the bank statement reads.

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The statutory inspection of the bank conducted by RBI with reference to the bank’s financial position as on March 31, 2022, and examination of the Inspection Report and Risk Assessment Report pertaining thereto and all related correspondence pertaining to the same revealed, inter alia, that the bank had not identified NPAs on an on-going basis, breached prudential inter-bank (gross) exposure norms, breached prudential inter-bank counter-party limit and breached limit of its investments included under HTM category resulting in contravention of aforesaid directions issued by RBI.

The central bank also issued notice to the said cooperative bank advising it to show cause as to why a penalty should not be imposed for contravention of the aforesaid directions issued.

"After considering the bank’s reply to the notice and oral submissions made during the personal hearing, the RBI came to the conclusion that the aforesaid charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty," the RBI said.

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