RBI takes Penal Action against Bank of Baroda

Case Brief

The Reserve Bank of India imposed a monetary penalty of Rs 5 lakh on Bank of Baroda under Section 47A(1)(b) of the Banking Regulation Act, 1949. RBI found that during April 1999 to March 2002 the bank netted internal and external liabilities in inter-office (inter-branch) accounts, leading to under-estimation of outside liabilities for the purpose of computing Net Demand and Time Liabilities and maintaining Cash Reserve Ratio/Statutory Liquidity Ratio. The conduct was held to be in violation of Section 24 of the Banking Regulation Act, 1949. RBI had first issued a show-cause notice, considered the bank's written reply, and granted a personal hearing before concluding that the violation was substantiated.