RBI imposes monetary penalty on The Mehsana Urban Co-operative Bank Ltd., Mehsana, Gujarat

Case Brief

By order dated August 01, 2022, RBI imposed a monetary penalty of ₹40.00 lakh on The Mehsana Urban Co-operative Bank Ltd., Mehsana, Gujarat. The penalty was imposed under the Banking Regulation Act, 1949 for non-compliance with the RBI (Co-operative Banks - Interest Rate on Deposits) Directions, 2016. RBI found that the bank had failed to pay interest on term deposits that matured on Sundays/holidays/non-business working days and were repaid on the next working day, on balances in current accounts of deceased individual depositors/proprietorship concerns until repayment to claimants, and on term deposits that remained unclaimed after maturity. RBI noted the action was based on deficiency in regulatory compliance and not meant to pronounce on the validity of customer transactions.