RBI slaps penalty on J&K State Co-operative Bank

New Delhi, Sep 27: The Reserve Bank of India (RBI) on Monday imposed a penalty of Rs 11 lakh on the Jammu & Kashmir State Co-operative Bank Limited, Srinagar for deficiencies in regulatory compliance.

The central bank said NABARD had conducted statutory inspection of the bank with reference to its financial position as on March 31, 2019 and its report found contravention of section 23 read with section 56 of the Banking Regulation Act, 1949 as the bank had opened branches without obtaining the prior permission of RBI, a press release of the bank obtained by Ziraat Times said.

“Based on the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for violation of the said directions,” the central bank said in a release.

After considering the bank’s reply, RBI said it came to the conclusion that the charge of contravention of sections of the Banking Regulation Act, 1949 was substantiated and warranted imposition of monetary penalty.

RBI said the imposition of monetary penalty 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.

“This penalty has been imposed in exercise of powers vested in 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,” the central bank said.