The Reserve Bank of India (RBI) has taken a stern step against Rajarshi Shahu Sahakari Bank Ltd., based in Pune, Maharashtra, by imposing a penalty of ₹1.00 lakh. The penalty, issued on November 16, 2023, is a result of the bank’s non-compliance with the directions issued by the RBI on ‘Maintenance of Deposit Accounts – Primary (Urban) Co-operative Banks.’ This action comes under the regulatory powers vested in the RBI by the Banking Regulation Act, 1949.
The penalty is not intended to question the validity of any transaction or agreement entered into by the bank with its customers but is a consequence of regulatory deficiencies.
The RBI’s statutory inspection of the bank, conducted with reference to its financial position as of March 31, 2022, revealed several deficiencies in regulatory compliance. Specifically, the bank had imposed fixed penal charges for a shortfall in maintaining the minimum balance in savings bank accounts, rather than charges proportionate to the extent of the shortfall. Additionally, the bank failed to notify its customers about the shortfall in the minimum balance before levying charges.
Following the inspection, a notice was issued to the bank, requiring it to show cause as to why a penalty should not be imposed for the failure to comply with the specified directions. After considering the bank’s reply and oral submissions made during the personal hearing, the RBI concluded that the charge of non-compliance was substantiated, justifying the imposition of a monetary penalty on the bank.
