RBI Imposes Penalty on The Uttarakhand Grameen Bank for Regulatory Non-Compliance

Dehradoon. The Reserve Bank of India (RBI) has recently wielded its regulatory authority by imposing a monetary penalty of ₹5.00 lakh on The Uttarakhand Grameen Bank located in Dehradun. The penalty comes as a result of the bank’s failure to adhere to the provisions outlined in the Banking Regulation Act, 1949. This move by the RBI underscores the importance of regulatory compliance within the banking sector.

The penalty, issued on March 27, 2024, stems from the bank’s contravention of section 26A(2) in conjunction with section 51 of the BR Act. The statutory inspection of the bank, conducted by the National Bank for Agriculture and Rural Development (NABARD), highlighted non-compliance with statutory provisions, prompting the RBI to initiate necessary action.

During the inspection, it was discovered that the Uttarakhand Grameen Bank had delayed transferring the eligible unclaimed amount to the Depositor Education and Awareness Fund, a violation that warranted the monetary penalty. The bank was subsequently issued a notice and given an opportunity to provide a response, followed by a personal hearing.

The RBI, after carefully examining the bank’s reply and considering the oral submissions made during the personal hearing, concluded that regulatory shortcomings were evident. It is important to note that this penalty does not pass judgment on the validity of any transactions or agreements entered into by the bank with its customers. Furthermore, the imposition of the monetary penalty does not preclude the RBI from undertaking any other action against the bank.

More Details on the Monetary Penalty, by RBI:

• Order dated March 27, 2024
• Amount of penalty: ₹5.00 lakh
• Contravention of provisions: section 26A(2) and section 51 of the Banking Regulation Act, 1949 (BR Act)
• RBI’s powers and authority for imposing penalties

This development serves as a reminder to financial institutions about the significance of adhering to regulatory guidelines and fulfilling their obligations transparently. The RBI’s decisive action underscores its commitment to maintaining the integrity and stability of the banking sector, while emphasizing the importance of compliance in safeguarding the interests of customers and the broader economy.