The Reserve Bank of India (RBI) has announced a monetary penalty of ₹8.30 lakh on Dombivli Nagari Sahakari Bank Limited for non-compliance with specific regulatory directions. The order, issued on January 21, 2025, highlights lapses in adherence to the RBI’s guidelines on ‘Maintenance of Deposit Accounts – Primary (Urban) Co-operative Banks’. This action is in accordance with the authority granted under Section 47A(1)(c), along with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Inspection and Findings
The RBI conducted a statutory inspection of the bank, examining its financial status as of March 31, 2023. During this process, several instances of non-compliance were identified. The bank received a notice from the RBI to explain why penalties should not be imposed for these lapses.
After carefully reviewing the bank’s written explanations, oral submissions during a hearing, and additional evidence, the RBI concluded that the bank had violated its regulations. The primary issue involved:
- Penal Charges on Inoperative Accounts: The bank imposed charges for not maintaining a minimum balance in certain dormant accounts. This practice was found to breach the RBI’s established guidelines aimed at protecting customer interests.
Regulatory Framework
The penalty was levied under the following provisions of the Banking Regulation Act, 1949:
- Section 47A(1)(c): Empowers the RBI to impose monetary penalties on banks for regulatory breaches.
- Sections 46(4)(i) and 56: Provide the legal framework for regulating co-operative banks and ensuring compliance with directives.
RBI’s Clarification
The RBI emphasized that this penalty is strictly related to regulatory non-compliance and does not impact any agreements or transactions between the bank and its customers. Additionally, this action does not rule out the possibility of further measures against the bank for other potential violations.
Implications for the Banking Sector
This penalty serves as a strong reminder for financial institutions to strictly adhere to regulatory requirements. Co-operative banks, in particular, must ensure that their policies align with the RBI’s guidelines to avoid such penalties.
For banks, this underscores the importance of:
- Regular audits to verify compliance with regulatory norms.
- Ensuring fair treatment of customers, especially those holding inoperative accounts.
For customers, this action reinforces the RBI’s commitment to safeguarding their rights and maintaining transparency in banking operations.
Conclusion
The ₹8.30 lakh penalty imposed on Dombivli Nagari Sahakari Bank underscores the RBI’s firm stance on regulatory compliance. This action highlights the critical need for financial institutions to prioritize customer protection, transparency, and adherence to established norms to maintain trust in the banking system.
