The Reserve Bank of India (RBI) has sanctioned a financial penalty of ₹75,000 against The Ron Taluka Primary Teachers Bank Ltd., situated in Ron, Karnataka. The penalty, decreed on May 22, 2024, was imposed due to the bank’s failure to comply with specific directives issued by the RBI regarding fraud monitoring and reporting mechanisms, as well as policies concerning nominal membership.
This penalty comes in the wake of an exhaustive statutory inspection conducted by the RBI, which scrutinized the financial standing of the bank as of March 31, 2022. During this examination, substantial instances of regulatory non-compliance were unearthed, prompting the RBI to issue a notice to the Ron Taluka Primary Teachers Bank, calling for an explanation as to why penalties should not be imposed for these infringements.
Following a meticulous review of the bank’s written response and oral submissions during a personal hearing, the RBI concluded that the bank had indeed contravened regulatory directives, as stated in a press release by the RBI. Two primary charges were upheld against the bank:
1. Non-Reporting of Frauds: The bank neglected to report instances of fraud to the RBI, thereby violating established procedures for fraud monitoring and reporting.
2. Exceeding Nominal Membership Limits: The bank surpassed the prescribed limit for the total number of nominal members compared to the total number of regular members.
The RBI’s authority to levy this penalty stems from the provisions of section 47A(1)(c), in conjunction with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The RBI emphasized that this action is solely based on regulatory shortcomings and does not invalidate any transactions or agreements made between the bank and its customers.
Moreover, the RBI clarified that the imposition of this monetary penalty does not preclude any additional actions that may be taken against the bank. This move serves as a reminder to all financial institutions regarding the importance of adhering to regulatory standards and the repercussions of failing to do so.