RBI imposes monetary penalty on Zoroastrian Co-operative Bank Ltd., Bombay

Case Brief

By an order dated November 23, 2022, RBI imposed a monetary penalty of ₹1.25 crore on Zoroastrian Co-operative Bank Ltd., Bombay under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The penalty followed a statutory inspection and related review which found that the bank had discounted accommodation bills under restricted letters of credit without establishing the genuineness of the underlying transactions/documents and had failed to preserve records in good order for eight years, contrary to RBI directions and the Co-operative Banks (Period of Preservation of Records) Rules, 1985. RBI clarified that the penalty is for regulatory non-compliance and does not affect the validity of any transaction or agreement with customers.