The Reserve Bank of India (RBI) has imposed a financial penalty of Rs 1.25 crore on Zoroastrian Co-operative Bank, Bombay, for non-compliance with RBI instructions on ‘Discounting of Bills through UCBs – Restricted Letters of Credit’ and the provisions of the Co-operative Banks Rules, 1985. This penalty had been imposed in the exercising of powers vested in RBI, the important financial institution said in a declaration released on Monday nighttime.
This movement is based totally on a deficiency in regulatory compliance and isn’t always intended to pronounce upon the validity of any transaction or agreement entered into by using the bank with its clients, the RBI stated within the statement. The RBI assertion said the statutory inspection of the bank was accomplished with the aid of RBI with regards to its monetary position as on March 31, 2020, and examination of the hazard evaluation report bearing on the Forensic Audit Report (FAR) with the aid of an external auditor.
RBI stated all associated correspondence within the count found out that the bank had failed to observe the imperative financial institution’s directions on Discounting of Bills by means of UCBs – Restricted Letters of Credit (LC) and the provisions of the Rules, because it discounted lodging bills below LCs with out organising the genuineness of underlying transactions/files and failed to maintain records in excellent order for a duration of 8 years.
With it, the center stated a word changed into issued to the bank advising it to expose cause as to why a penalty ought to now not be imposed for non-compliance with the RBI instructions/Rules. After considering the bank`s reply to the awareness, additional submissions made with the aid of it, and oral submissions made throughout the non-public hearing, RBI said it came to the realization that the fee of non-compliance with the aforesaid RBI guidelines/Rules become substantiated and warranted imposition of financial penalty, to the extent of non-compliance with such instructions/Rules.