RBI slaps penalty on Shri Kanyaka Nagari Sahakari Bank, Chandrapur, here's why

New Delhi: The Reserve Bank of India (RBI) on Wednesday imposed a monetary penalty of Rs 10.50 lakh on Shri Kanyaka Nagari Sahakari Bank Ltd, Chandrapur, for contravention of norms, including on fresh loans to the real estate sector.

The RBI, in a statement, said the inspection report of the bank based on its financial position as of March 31, 2018, and March 31, 2019, revealed that it had given fresh loans to the real estate sector in violation of the operational instructions issued by the RBI and also opened on-site ATMs without the required permission.

Further, the bank delayed the reporting of frauds on many occasions, and also granted director-related loans in contravention of/ non-compliance of directions.

A show-cause notice was issued to it.

After considering the bank's replies, oral submissions made during the personal hearing and additional submissions made by the bank, the RBI came to the conclusion that the charges of non-compliance with RBI directions were substantiated and warranted the imposition of monetary penalty.

In another statement, the RBI said a penalty of Rs 2.50 lakh has been imposed on the Nizamabad District Co-operative Central Bank Ltd, Nizamabad, Telangana, for non-adherence/ violation of certain directions on the 'Income Recognition, Asset Classification, Provisioning and Other Related Matters ‘UCBs'. Also Read: Planning to visit nearby markets? Check Google Maps’ new feature that can warn you about crowded places

The RBI, however, added that in both cases, the penalties were based on deficiencies in regulatory compliance and not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers. Also Read: IT Department conducts searches in relation to fintech company offering loans via mobile app

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