Reserve Bank of India imposes monetary penalty on Seva Vikas Cooperative Bank Limited, Pune

Case Brief

RBI imposed a monetary penalty of Rs 55 lakh on Seva Vikas Cooperative Bank Limited, Pune by order dated February 02, 2021. The penalty was levied under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, after a scrutiny in 2019 found non-compliance with RBI's Master Circulars on Management of Advances - UCBs and Income Recognition, Asset Classification, Provisioning and Other Related Matters - UCBs. RBI said the bank failed to ensure end-use of funds lent, did not adhere to IRAC norms, and restructured loan accounts with retrospective effect on invalid grounds. After a show-cause notice and review of the bank's reply, RBI concluded the violations were substantiated and imposed the penalty. RBI also clarified that the action is based on regulatory compliance deficiencies and does not pronounce on the validity of customer transactions or agreements.