So far in April, the Reserve Bank of India (RBI) has taken strict action against many banks and non-banking finance companies. RBI has taken strict action against non-compliance of guidelines issued on “Exposure Limits for Group Borrowers”. A fine of Rs 3.30 lakh has been imposed on Mumbai-based Jankalyan Sahakari Bank Limited.
This step has been taken by RBI under various provisions of the Banking Regulation Act 1949. The Central Bank has given this information through a press release on April 27. On April 24, an order related to the action was issued to the bank.
Violation of rules was revealed during inspection
An inspection was conducted by RBI with respect to the financial position of the bank. During this period, shortcomings in compliance with the rules were revealed. After which a show cause notice was issued to the bank. After considering the replies received and the oral arguments given during the personal hearing, all the allegations were found to be true. Only after this the decision to impose penalty was taken.
The bank broke these rules
The bank had in some cases breached the prudential exposure limits prescribed for group borrowers. However, this action will not affect customers. RBI itself has confirmed this. The Central Bank said, “This action is based on the deficiencies observed in compliance with the rules. It is not intended to have any impact on the validity of any transaction or agreement entered into by the bank with its customers.”
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