RBI imposes monetary penalty on Abhyudaya Co-operative Bank Limited, Mumbai

Case Brief

RBI, by order dated May 05, 2022, imposed a monetary penalty of Rs 58.00 lakh on Abhyudaya Co-operative Bank Limited, Mumbai for non-compliance with RBI directions relating to placement of deposits with other banks, monitoring and reporting of frauds, income recognition/asset classification/provisioning (IRAC norms), and management of advances. The inspection found, among other things, that the bank accepted fresh deposits from other non-scheduled UCBs despite not meeting the criteria, had not phased out existing UCB deposits by March 31, 2019, reported a fraud with a delay of 942 days, failed to classify certain loan accounts as NPAs, and failed to ensure end use of funds lent by it. RBI stated that the penalty was imposed for regulatory non-compliance under the Banking Regulation Act, 1949, and was not intended to pronounce upon the validity of any transaction or agreement with customers.