The Reserve Bank of India (RBI) has imposed, by an order dated June 9, 2023, a monetary penalty of ₹6,00,000/- (Rupees Six lakh only) on Jowai Cooperative Urban Bank Limited, Jowai, Meghalaya (the bank) for contravention of RBI directions to Urban Cooperative Banks on (i) ‘Exposure Norms and Statutory / Other Restrictions – UCBs’ and (ii) Know Your Customer (KYC) Directions, 2016. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.
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.
The inspection report of the bank based on its financial position as on March 31, 2022, revealed, inter alia, that the bank breached inter-bank (Gross) exposure limits and failed to carry out periodic review of risk categorisation of its accounts. Based on the same, a Notice was issued to the bank advising it to show cause as to why penalty shall not be imposed for non-compliance with the directions.
After considering the bank’s reply, RBI came to the conclusion that the aforementioned charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.
Press Release: 2023-2024/389