Mumbai, September 28, 2023: In a recent development, the Reserve Bank of India (RBI) has taken decisive action against Bassein Catholic Co-operative Bank Ltd., located in Vasai, Maharashtra. By virtue of an order issued on September 22, 2023, the RBI has imposed a monetary penalty amounting to ₹25 lakh (Rupees Twenty-Five lakh only) on the bank. This penalty has been levied in response to the bank’s contravention of the provisions outlined in Section 20, coupled with Section 56 of the Banking Regulation Act, 1949 (BR Act). Furthermore, it pertains to the bank’s non-compliance with the RBI’s directives on ‘Exposure Norms and Statutory/Other Restrictions.’ The RBI’s authority to impose such penalties arises from its powers as outlined in Section 47A(1)(c), in conjunction with Sections 46(4)(i) and 56 of the BR Act.
It is essential to note that this action is driven by shortcomings in regulatory compliance and is not intended to pass judgment on the validity of any transaction or agreement the bank has entered into with its customers.
The genesis of this penalty lies in the statutory inspection conducted by the RBI, with reference to the bank’s financial status as of March 31, 2021. This inspection encompassed an in-depth review of the Risk Assessment Report, Inspection Report, and all related correspondences related to the same. During this comprehensive examination, it came to light that the bank had extended multiple unsecured loans to one of its directors and his proprietorship firm.
Subsequently, the RBI issued a notice to the bank, urging it to provide a response explaining why a penalty should not be imposed for its contravention of the provisions contained within the BR Act and the associated RBI directives. The bank responded to the notice and presented additional submissions, alongside oral presentations during a personal hearing.
Following a meticulous review of the bank’s responses, supplementary submissions, and oral presentations, the RBI has reached the conclusion that the charges of contravention of statutory provisions and the aforementioned RBI directives are well-founded. As a result, the imposition of a ₹25 lakh monetary penalty has been deemed appropriate.
This enforcement underscores the RBI’s unwavering commitment to upholding regulatory standards and ensuring that financial institutions abide by established guidelines. Such actions serve to safeguard the integrity and stability of the banking sector while underscoring the importance of strict adherence to statutory provisions and regulatory directives.
Bassein Catholic Co-operative Bank Ltd. has been directed to remit the monetary penalty to the RBI within the stipulated timeframe. This development serves as a cautionary tale for all financial institutions, emphasizing the necessity of meticulous compliance with regulatory norms and directives to avoid punitive measures that can impact their operations and reputation.
