RBI imposes Rs 5 Lakh penalty on Himachal Pradesh State Co-operative Bank Limited

The Reserve Bank of India (RBI) has, by an order imposed a monetary penalty of Rs 5.00 lakh (Rupees Five lakh only) on The Himachal Pradesh State Co-operative Bank Limited, Shimla (the bank) for contravention of the provisions of section 26 A (2) read with section 56 of the Banking Regulation Act, 1949 (BR Act). This penalty has been imposed in the exercise of powers vested in RBI, conferred under the provisions of section 47A(1)(c) read with sections 46 (4)(i) and 56 of the BR Act.

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The National Bank for Agriculture and Rural Development (NABARD) conducted a statutory inspection of the bank concerning its financial position as of March 31, 2022. Based on supervisory findings of non-compliance with statutory provisions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why a penalty should not be imposed on it for its failure to comply with the said provisions of the BR Act.

After considering the bank's reply to the notice and oral submissions made by it during the personal hearing, RBI found, inter alia, that the charge of not transferring the eligible amounts to the Depositor Education and Awareness Fund within the prescribed period was sustained, warranting imposition of monetary penalty.

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This action 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. Further, the imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

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