Dhanlaxmi Bank and a Co-op bank faces penalty charges imposed by RBI

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The Reserve Bank of India has imposed a penalty on Dhanlaxmi Bank for violating a part of the Banking Regulation Act, 1949, as well as a paragraph of the Depositor Education and Awareness Fund Scheme, 2014. (the scheme).

The NE & EC Railway Employees’ Multi-State Primary Cooperative Bank, Gorakhpur, was also fined Rs 20 lakh by the banking regulator for regulatory violations.

The Reserve Bank of India announced on Monday that Dhanlaxmi Bank, Thrissur, has been fined Rs 27.5 lakh for violating certain depositor education and awareness fund scheme rules.

The NE & EC Railway Employees’ Multi-State Primary Cooperative Bank, Gorakhpur, was also fined Rs 20 lakh by the banking regulator for regulatory violations.

The RBI said in a statement that a penalty had been imposed on Dhanlaxmi Bank for violating a part of the Banking Regulation Act, 1949, as well as a paragraph of the Depositor Education and Awareness Fund Scheme was established in 2014. (the scheme).

The bank’s Statutory Inspection for Supervisory Evaluation (ISE) was carried out in relation to its financial position as of March 31, 2020, according to the RBI, and the examination of the Risk Assessment Report and Inspection Report pertaining to the same revealed, among other things, a violation of the Act and the scheme.

A notification was sent to the bank, requesting that it show cause why a penalty should not be levied for the violation.

It said that “After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of contravention of aforesaid provisions of the Act read with the scheme was substantiated and warranted imposition of monetary penalty on the bank,”.

The inspection report of the NE & EC Railway Employees Multi-State Primary Co-operative Bank‘, based on its financial situation as of March 31, 2019, found non-adherence/violation of particular orders issued to it under the Supervisory Action Framework, according to the RBI (SAF).

The penalty is based on regulatory compliance failures in both cases, according to the RBI, and is not meant to rule on the legitimacy of any transaction or arrangement entered into by the banks with their clients.

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