The Reserve Bank of India (RBI) imposed a monetary penalty of 13 lakh (Rupees Thirteen lakh only) on Bombay Mercantile Co-operative Bank Ltd., Mumbai (the bank) in an order dated April 21, 2023 for violating the provisions of Section 26-A read with Section 56 of the Banking Regulation Act, 1949 (BR Act). This penalty has been imposed in accordance with the BR Act’s section 47 A (1) (c) in conjunction with section 46 (4) (i) and section 56. This action is based on a regulatory compliance deficiency and is not intended to invalidate any transaction or agreement engaged into by the bank with its customers.
Background
The statutory inspection of the bank conducted by RBI with reference to its financial position as on March 31, 2020, and examination of the Risk Assessment Report and all related correspondence pertaining to the same, revealed, inter alia, contravention of the aforesaid provisions of BR Act to the extent the bank failed to transfer the eligible amount to Depositor and Education and Awareness Fund (DEAF) within the prescribed period and transferred the same with delay. In furtherance to the same, a notice was issued to the bank advising it to show cause as to why a penalty should not be imposed for contravention of the provisions of the BR Act, as stated therein.
After reviewing the bank’s response to the notice, its additional submissions, and its oral submissions made during the personal hearing, RBI determined that the charge of contravention of the provisions of section 26-A of the BR Act was substantiated and warranted the imposition of a monetary penalty.
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