'Reported frauds with delay': RBI imposes heavy penalty on this bank for non-compliance with RBI directions — check details

RBI monetary penalty: The Reserve Bank of India imposed a monetary penalty of ₹20.00 lakh (Rupees Twenty lakh only) on Vasai Vikas Sahakari Bank Ltd., Vasai, Maharashtra for non-compliance with RBI directions on ‘Frauds monitoring and reporting mechanism’.

RBI during the statutory inspection with reference to its financial position as on March 31, 2020, and examination of the Risk Assessment Report and all related correspondence the bank had reported frauds with delay, “The statutory inspection of the bank conducted by RBI with reference to its financial position as on March 31, 2020, and examination of the Risk Assessment Report and all related correspondence pertaining to the same, revealed, inter alia, that the bank had reported frauds with delay. In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the RBI directions, as stated therein,” the RBI notification read.

The central bank had also asked for clarification from the bank's side by issuing a notice to Vasai Vikas Sahakari Bank advising it to show cause as to why penalty should not be imposed for non-compliance with the RBI directions. 

RBI's action came after considering the bank’s reply to the notice and additional submissions made by it. “After considering the bank’s reply to the notice and additional submissions made by it, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty,” the notification read.

This is not the first time that Vasai Vikas Sahakari Bank Ltd., Vasai has been charged with a monetary penalty. In October last year the RBI had imposed a penalty of Rs. 90 lakhs penalty for deficiency in regulatory compliance. 

The inspection report of March 2019 has stated that the bank had not complied with the RBI directions on ensuring end use of funds in borrowal accounts and classification of loans/ advances as non-performing assets, specific direction of RBI for ensuring that the bank’s balance sheet and profit & loss account are signed by at least three of it’s directors in accordance with section 29 read with section 56 of the Act (despite having noted to ensure such compliance) and the provisions of section 31 read with section 56 of the Act.