RBI imposes Rs 1 lakh penalty on Lucknow-based co-op bank

Mumbai, Apr 11: The Reserve Bank on Wednesday said it has imposed a penalty of Rs 1 lakh on UP Postal Primary Co-operative Bank, Lucknow for violation of norms regarding shifting of its branch. The RBI had issued a show-cause notice to the bank, in response to which the lender submitted a written reply.

After considering the facts of the case and the bank's reply in the matter and personal hearing, the Reserve Bank of India (RBI) came to the conclusion that the violation was substantiated and warranted imposition of penalty.

The Rs 1 lakh penalty has been imposed on the co-operative bank "for violation of RBI Instructions/Guidelines for shifting of its branch without obtaining prior approval from RBI", the central bank said.

On Tuesday, the RBI had imposed certain restrictions on The Mudhol Co-operative Bank, Bagalkot district, Karnataka till its "financial position improves".

From the close of business on April 8, 2019, the bank has been barred from granting or renewing any loans, make any investments, and acceptance of fresh deposits, without prior approval of RBI in writing.

"In particular, a sum not exceeding Rs 1,000 of the total balance in every savings bank or current account or any other deposit account may be allowed to be withdrawn" subject to conditions stated in the RBI directions, it said.

The RBI, however, added that the directions issued to The Mudhol Co-operative Bank should not per se be construed as cancellation of the banking licence.

The bank will continue to undertake banking business with restrictions till its financial position improves, it added.

PTI